In December 2022, the Florida Legislature convened a special session to address property insurance and disaster recovery. After weeks of debate and wrangling, the legislature passed two bills that directly affect Florida homeowners: Senate Bill 2-A (property insurance reforms) and SB 4-A (disaster relief). After their passage, Governor DeSantis quickly signed both bills into law.
SB 2-A is a game-changer for the rules that govern property insurance claims and insurance-backed repairs and restoration. Among other things, the law eliminates AOBs and automatic plaintiff attorney’s fees. It also significantly reduces the availability of lawsuits based on insurance bad faith. On the other hand, the law imposes stricter deadlines for insurance companies to process claims. SB 4-A is important in its own right, funding hundreds of millions of dollars in disaster-relief projects and creating new property tax relief for Floridians.
In this article, we focus on SB 2-A, explaining how the law affects Floridians of all types, including homeowners, businesses, contractors, insurance professionals, and attorneys. For more info about Florida insurance laws and regulations, try our Florida Guide to Property Insurance.
Key Takeaways
There’s a lot in the new Florida insurance and disaster recovery laws, and it’s easy to get lost in all the new provisions. So for a shorter version, here are four things you should know about the new laws:
- One-Year Claim Filing Deadline. The deadline to notify an insurer about a potential new property insurance claim is now one year from the date of loss (the old deadline was two years). Critically, the new deadline went into effect when Governor DeSantis signed SB 2-A into law, so the one-year deadline will apply to Hurricane Ian claims.
- Shorter Deadlines for Insurance Companies to Process a Claim. The law shortens the deadlines that apply to insurance companies when they process property insurance claims. New deadlines become effective March 1, 2023, and for the most part they apply only to residential property claims (i.e., homeowner’s claims). Yet to be seen is how these new deadlines will be enforced.
- Bye Bye AOBs. The new law bans policyholders from using an assignment of benefits (AOB) on insurance policies issued after January 1, 2023. AOBs allow policyholders to effectively hand over their claim to contractors repairing their property, and were often used by Floridians. AOBs remain legal for policies issued before January 1, 2023.
- Property Owner Lawsuits More Difficult. Senate Bill 2A eliminates the award of attorney’s fees for plaintiffs who win property-claim lawsuits. In addition, the new laws make it much more difficult to assert a claim of insurance bad faith, which had been a relatively common feature of property insurance lawsuits.
Where the Laws Expand Policyholder Rights and Protections
Unlike the more controversial parts of the new Florida insurance laws, these provisions are generally a good thing for property owners.
Stricter Deadlines for Insurance Companies to Process Claims
Already under Section 627.70131, Florida Statutes, insurers were required to meet certain deadlines when processing claims, including the all-important 90-day deadline to pay or deny a claim. In SB 2A, the Florida legislature both tightened those deadlines and limited loopholes that allowed insurers to avoid the deadlines. The new deadlines don’t kick in until March 1, 2023, and they don’t apply retroactively to claims before that date, such as Hurricane Ian claims.
The chart below summarizes how the 2022 Florida insurance reforms will change insurer deadlines for responding to claims. Remember these deadlines apply only to property insurance claims–not auto, medical, or life-insurance claims.
| Action Required of Insurance Company | Old Deadline | Deadline as of March 1, 2023 | Applicability |
| Acknowledge receipt of policyholder communications | 14 days after receiving the policyholder communication | 7 days after receiving policyholder communication | Residential claims only |
| Begin investigating the policyholder’s claim | 14 days after receiving the policyholder’s proof of loss | 7 days after receiving the policyholder’s proof of loss | Residential claims only |
| Conduct physical inspection of property | 45 days after receiving the policyholder’s proof of loss, with an automatic exception for hurricanes | 30 days after receiving the policyholder’s proof of loss, no automatic exception for hurricanes | Residential claims only |
| Send its adjuster’s loss estimate to the policyholder | 7 days after receiving a policyholder’s request for the estimate | 7 days after generating the loss estimate (submission is now mandatory) | Residential claims only |
| Pay or deny a claim and, if denied, provide a written explanation for the denial | 90 days after receiving the policyholder’s notice of loss | 60 days after receiving the policyholder’s notice of loss | Residential claims Commercial property claims if structure is 10k ft2 or less Commercial tenant claims on contents if premise is 10k ft2 or less |
Added Documentation Requirements for Insurers
A loss estimate prepared by an insurer’s adjuster is an important part of any claim because it details exactly how your insurer believes your home or belongings were damaged. Previously, a homeowner could obtain a copy of that report only by requesting a copy for the insurance company. Under the new Florida law, receiving a copy of the report happens automatically. Any detailed loss estimate that an insurance company’s adjuster creates must be sent to the policyholder within seven days of the estimate’s creation.
The new law also specifies the minimum information that an insurance company must maintain for each property claim file. Although policyholders don’t have an automatic right to access the claim file, a properly maintained claim file is an important part of any claim, especially if there’s a dispute between the policyholder and the insurance company. The minimum information that the new law requires insurers to document and maintain are:
Florida Statutes, Section 70131(4)(b).
- Any claim-related communication made between the insured and the policyholder or the policyholder’s representative;
- The insurer’s receipt of the policyholder’s proof of loss statement;
- Any claim-related request for information made by the insurer to the policyholder or the policyholder’s representative;
- Any claim-related inspections of the property made by the insurer, including physical inspections and inspections made by electronic means;
- Any detailed estimate of the amount of the loss generated by the insurer’s adjuster;
- The beginning and end of any [period that insurer deadlines are put on hold because of mediation or a policyholder or its representative failing to provide insurers with material claims information]; and
- The insurer’s payment or denial of the claim.
Encouraging Electronic Means of Claims Processing
This provision has no hard requirements, but it encourages insurers to adopt technology in handling claims. Even though it’s aspirational, it’s still meaningful in that it gives insurance companies explicit permission to use technologies to make claims handling and adjusting more convenient for insurance companies and policyholders.
Fewer Exceptions and Escape Clauses for Insurer Deadlines
Under the prior version of Florida law, claim deadlines applicable to insurance companies didn’t apply if “factors beyond the reasonable control of the insurer prevent” them from meeting the deadline. That’s a big caveat. The new law doesn’t eliminate exceptions altogether, but it does specify that an exception is available only if the Florida Office of Insurance Regulation explicitly allows for it, and even in that case the extension can be no longer than 30 days.
In addition, no longer is the deadline for physically inspecting a property automatically extended by a hurricane. Again, the Florida Office of Insurance Regulation can extend the inspection deadline by as much as 30 days, but the extension doesn’t happen automatically with a hurricane.
Requirements for Mandatory Arbitration
Senate Bill 2A adds a new requirement that gives consumers more information about whether and how arbitration may be used in their insurance contract. Arbitration is a way to process lawsuits that uses private mediators or attorneys instead of judges or juries to decide the outcome of the lawsuit. Generally speaking, policyholders and consumers prefer to avoid arbitration.
Mandatory arbitration provisions in property insurance policies were once rare in Florida. But in February, 2022, the Florida Office of Insurance Regulation approved a new endorsement that allowed insurers to include a mandatory arbitration provision in residential property policies. The new Florida insurance law implicitly authorizes insurance companies to continue using these mandatory insurance provisions, while at the same time establishing relatively strict preconditions for their use. Specifically, an insurance company can include a mandatory arbitration provision in a property insurance policy only if all the following criteria are met:
Florida Statutes, Section 627.70154.
- The mandatory binding arbitration requirements are contained in a separate endorsement attached to the property insurance policy.
- The premium that a policyholder is charged for the policy includes [a discount or credit] for the mandatory binding arbitration endorsement.
- The policyholder signs a form electing to accept mandatory binding arbitration. The form must notify the policyholder of the rights given up in exchange for the credit or premium discount, including, but not limited to, the right to a trial by jury.
- The endorsement establishes that an insurer will comply with the mediation provisions [required under Florida law] before the initiation of arbitration.
- The insurer also offers the policyholder a policy that does not require that the policyholder participate in mandatory binding arbitration.
Where the Laws Limit Policyholder Rights
Shorter Period to File Insurance Claims
The new laws cut the time periods in which to file a property insurance claim in half. Previously under Florida law, property owners had two years from the date of loss to file a claim. That deadline is now one year. The new laws also shortened the window to file supplemental claims, from 3 years to 18 months.
Bad Faith Claims Limited
Prevailing in a lawsuit based on insurance bad faith just got a lot harder. With the passing of Senate Bill 2A, it is now more difficult for a policyholder to sue their property insurance company for bad faith based on how their claim was settled. In order to do so, a court must first find that there has been a breach of contract by the insurance company. Accepting an offer of judgment or appraisal award is also not enough to constitute evidence–rather, the plaintiff needs additional proof in order to prevail in the lawsuit. Moreover, even if an insurance company’s appraisal award is higher than their final estimate, this alone cannot be used as evidence towards a bad faith case against them.
Plaintiff Attorney’s Fees Limited
For decades, Florida law awarded attorney’s fees to a plaintiff who prevailed in property insurance lawsuit. No longer. Effective January 1, 2023, attorneys representing policyholders in residential or commercial property lawsuits will no longer receive statutory attorney’s fees if they win the case. Florida statutes still grant plaintiff attorney’s fees for surplus lines property policies, but those are far less common than residential and commercial policies.
No More Assignments of Benefits
Bye bye AOBs. Before Governor DeSantis signed SB 2-A into law, Florida law permitted policyholders to enter an assignment of benefits (AOB) with a contractor or other third party as long as they complied with the strict requirements of Section 627.7152, Florida Statutes. The 2022 Florida insurance reforms prohibit AOBs altogether — at least for insurance policies issued after January 1, 2023. If your insurance policy was issued before January 1, 2023, then you can still use an AOB (provided you comply with requirements of Section 627.7152, Florida Statutes). But if your insurance policy was issued after January 1, 2023, you cannot use an assignment of benefits (AOB) in the state of Florida.
For more information about AOBs in Florida, see our AOB Guide for Florida Contractors and AOB Guide for Florida Property Owners.
***
The 2022 changes to Florida’s property insurance laws mark a significant shift in the landscape for homeowners and insurers alike. As these reforms take effect, it’s crucial for property owners and pros to stay informed and understand how these changes impact their rights and responsibilities.
