With unprecedented speed, the Florida Legislature prepared Senate Bill (SB) 2-D in response to Governor DeSantis's demand for a special session to address Florida's spiraling property insurance market. Under the theory that rising insurance rates are caused by insurance lawsuits, the bill offers insurance companies more protection by limiting your ability to get repair work done after a hurricane and get legal help if your insurance company fails to pay you timely or in full. DeSantis signed the bill into law on May 26, 2022. You should be wondering: How will this bill impact me?
Your Ability to Find Attorneys Willing to Fight Your Insurance Company for Payment in Full
Most of the people we represent do not have thousands of dollars set aside to pay an attorney upfront when they need legal help to get paid on their insurance claim. They barely have enough to pay their insurance premium, but they pay that because they want to ensure their home is protected in case it is damaged by a hurricane. But, when that happens and their insurance company issues a small, insufficient payment, then refuses to consider any other invoices or estimates and simply ignores them, their only recourse is to hire an attorney and sue their insurance company. And our clients typically hate to do this. They didn't want it to come to a lawsuit. They just wanted to be paid the fair value of their claim, but their insurance company refused to do that. It was the insurance company's wrongful denial or delay that left their own policyholder with the only option of hiring and attorney and suing to recover. SB 2-D, however, makes it more difficult for you, as the policyholder, to hold your insurance company accountable by enacting two new protections for insurance companies: 1) a limitation on your attorney's ability to recover a fee multiplier; and 2) a higher burden on you to prove your insurance company acted in bad faith.
Limitation of Fee Multipliers
Prior to SB 2-D, attorneys were incentivized to take up your cause when your insurance company treated you unfairly because they didn't need to charge you upfront. Rather, they could work on contingency and recover an additional fee, known as a “multiplier,” later if they won against your insurance company. At its core, a multiplier is an incentive, making your case more worthy of an attorney's time and effort. Like a BOGO sale. You are far more inclined to purchase two items when the second item is free. A multiplier makes attorneys far more inclined to take up your case against the insurance company because it gives them the ability to recover a greater fee when your case is difficult and there are not many attorneys capable or willing to take it. SB 2-D, however, protects insurance companies by limiting the types of cases in which they will be required to pay multipliers to only “rare and exceptional circumstances.” This means it will be harder for you to find capable, experienced attorneys willing to take your case without charging you upfront because, post-SB 2-D, it will now be harder for attorneys to recover adequate payment for their time and costs from your insurance company.
Limitation of Bad Faith Lawsuits
An insurance company acts in bad faith when it intentionally minimizes the value of your claim by knowingly underestimating your damages, misrepresenting facts or policy provisions, or ignoring your requests and evidence all with the goal of paying you less. We have discussed bad faith claims in more detail here. Prior to SB 2-D, you could sue your insurance company for their bad faith treatment of you by filing a proper Civil Remedy Notice and establishing two items: 1) that the insurance company is obligated to pay for the damage; and 2) a determination of the extent of the damage, i.e., the amount your insurance company owes you. Post-SB 2-D, you now must prove, i.e., have a jury or judge determine, the insurance company breached the policy of insurance. However, if the insurance company sends the matter to appraisal, they can avoid this outcome. Most insurance policies give the insurance company the right to invoke, and require you to submit to, appraisal. The only issue determined in appraisal is the amount the insurance company owes. No determination is made as to whether the insurance company breached the policy of insurance. Meaning, SB 2-D gives insurance companies an “out” by allowing them to avoid bad faith lawsuits by strategically sending the claim to appraisal.
Your Ability to Find Contractors for Immediate Repairs
Much like their non-existent “hurricane attorney” fund, most of the clients we represent don't have thousands of dollars set aside to pay contractors to help protect and restore their home if a hurricane hits. For this reason, many contractors that provide emergency services like tarping, dry-out, mold assessments, etc. offer to do this necessary work under what is called an “Assignment of Benefits” (AOB). This means you, the homeowner, do not have to pay the contractor upfront out-of-pocket. Instead, the contractor agrees to recover what they are owed from your insurance company under an AOB so you can get the necessary work done to preserve your property from further damage, and the contractor will work their payment out later with your insurance company.
Before SB 2-D was passed, many contractors were willing to do this because they were also able to recover their attorney's fees if the insurance company disputed their bill and didn't pay them timely or in full. SB 2-D, however, removed this option and insulates insurance companies from having to pay an AOB contractor's attorney's fees. What will this mean for you? Your ability to find contractors after a hurricane to protect your property may be greatly diminished. Many of these contractors will have to ask to be paid upfront because they no longer have a reliable option to recover from your insurance company. This may mean significant delay—or removal altogether—of your ability to get services needed to stop continued water intrusion and further damage to your home because you will be less able to find or pay these contractors.
Believing this removal of AOB contractors' ability to recover fees from the insurance company to be unconstitutional, a coalition of contractors recently filed suit claiming SB 2-D unlawfully limits their access to courts. Remember, access to courts is one of the pillars of our judicial system. If citizens cannot seek justice in a court of law when an insurance company treats them unfairly, what other recourse do they have? The answer is none. A court of law is the only place where a policyholder can hold his or her insurance company accountable. This is why the attorney's fees limitations SB 2-D puts into place to further protect insurance companies has caused concern among advocates for Florida's consumers' rights.
Consumer Rights Advocates Speak Out Against SB 2-D
These erosions of consumer rights in SB 2-D have prompted many consumer rights advocates to speak out against the bill. “We feel like the bill has very little consumer protection in it," Amy Boggs with the Florida Justice Association said. "It's really more of a corporate bailout for these insurance companies that mismanaged their funds and have mismanaged litigation and some other things.” Like our firm, Boggs and many other Florida attorneys are worried the new law will make it harder for homeowners to get access to courts to hold their insurance companies accountable when they fail to pay your claim timely or in full or otherwise treat you unfairly. While it is unfortunate insurance company lobbyists were successful in pushing these protections for insurance companies into law, we will continue to fight for policyholders' rights to the extent Florida law allows and seek justice when insurance companies adjust claims in bad faith. If you feel your insurance company has treated you unfairly, never hesitate to contact us for a free no-cost, no-obligation consultation. We are here to help.