Senate Bill 2A – Then & Now

At Chapman Insurance Group, it’s our duty to keep clients informed about shifting laws, bills, and regulations. That’s why we’ve put together this post about Senate Bill 2A in Florida that addresses changes to property insurance, along with a few other topics. 

Here, we’ll familiarize you with the structure of how the law used to be and what changes to expect from Senate Bill 2A. 

Attorney Fees

THEN: According to the current attorney fee arrangement, the carrier will lose money even if they settle and they are obligated to pay claimant attorney fees. In many instances, attorney fees outweigh the claim payment. 

NOW: With Senate Bill 2A, neither party will be awarded attorney fees, each party is responsible for their own fees, and the one-way attorney fee statutes for litigated properties are repealed. 

Assignment of Benefits

THEN: In the previous statute, it was possible to hand off benefits from a client to a contractor with an attorney overseeing the process. 

NOW: Senate Bill 2A prohibits the assignment of benefits for both residential and commercial properties. Under this bill, you are unable to sign over your insurance benefits to a third party. 

Arbitration

NOW: Under Senate Bill 2A, arbitration is binding. The insured party must consent to arbitration, a 20-25% discount is required in this instance, and the insured waives their right to file a lawsuit if it should occur. 

Timing

THEN & NOW: 

The introduction of Senate Bill 2A in Florida has changed how much time a person has to file a claim.  What began as a 3-year period has been shortened to one year, and 18 months are given for supplementals. 

Insurance Company Duties

This senate bill has amended prompt-pay statutes to ensure that claims are handled promptly. This is done by cutting down on the time that insurers: 

PROMPT PAY LAWS TIMING	THEN	NOW
Acknowledgement of a claim	14 days	7 days
Begin Investigation of a claim	14 days	7 days
Physical inspection must be done within	45 days	30 days
Time to pay or deny a claim	90 days	60 days

It also requires insurers to send any adjuster’s report to the policyholder that estimates the loss within 7 days of its creation, and the insurer must keep records of all of this information.

Citizens Property Insurance Corp Info

Senate Bill 2A includes several provisions addressing the growth and exposure of Citizens. 

Additionally, SB 2A provides a phased-in flood requirement for Citizens’ policyholders. These provisions include:

• Increasing the eligibility threshold for Citizens’ renewal personal lines policyholders.
• Citizens’ policyholders are ineligible for Citizens’ coverage at renewal upon receiving an offer of comparable coverage from an authorized insurer for a premium that is not more than 20 percent greater than the Citizens’ renewal premium.
• Increasing the eligibility threshold for Citizens’ new policies for commercial residential coverage from 15 to 20 percent. The new business threshold is consistent with the current threshold for new policies of personal residential coverage.
• Requiring that Citizens’ rate be non-competitive with the approved rates charged in the admitted market pursuant to the existing glide path.
• Removing the glide path rate limitation for any new or renewal personal lines policy for non-primary residences written on or after November 1, 2023.
• The rate for these policies must be no more than 50 percent above and no less than the established rate for Citizens that was in effect one year before the date of the application.
• The bill defines primary residence as the dwelling that is the policyholder’s primary home or is a rental property that is the primary home of the tenant and which the policyholder or tenant occupies for more than nine months of each year.

Flood Coverage 

• Requiring applicants or insureds of Citizens for personal lines residential coverage to obtain flood insurance for new policies starting in March of 2023. The phased-in flood requirement establishes:
• For risks located in areas designated by the Federal Emergency Management Agency as special flood hazard areas, flood insurance must be secured for new Citizens policies with an effective date on or after April 1, 2023, and at renewal for Citizens policies that renew on or after July 1, 2023.
• For all other risks, the requirement to obtain flood insurance at policy issuance or renewal is effective:
  • March 1, 2024, for policies insuring property to a limit of $600,000 or more.
  • March 1, 2025, for policies insuring property to a limit of $500,000 or more.
  • March 1, 2026, for policies insuring property to a limit of $400,000 or more.
  • March 1, 2027, for all other policies.

Understanding Senate Bill 2A

At CIG, we understand that ‘legalese’ can be overwhelming and hard to understand. That’s why we’re here to help! To learn more about Senate Bill 2A in Florida and how it affects you, get in touch with one of our agents today.