A South Florida family reportedly lost their homeowners insurance after their mortgage company failed to pay premiums from escrow. Another Floridian from Tampa was denied insurance coverage on a home he was purchasing because of a past claim for water damage on the property.
These stories and thousands more have prompted Chief Financial Officer Tom Gallagher to join Senator Mike Fasano and Representative David Rivera in pursuing legislation to restore Florida’s marketplace to one that is fair and reasonable for insurance consumers.
“Thousands of consumers have called us in the last year saying they feel powerless to protect themselves from their insurance companies,” Gallagher said. “It is fundamentally unfair for consumers to be non-renewed, canceled or to surrender their legal rights with no explanation, or for an insurance company to use incorrect information at the expense of consumers.”
“Consumers deserve to be in the loop on decisions made by their insurance companies so they know exactly what’s going on with their policy or claim,” Sen. Fasano said. “A Consumers’ Bill of Rights would place the consumer first, ensuring fair and equitable treatment from insurance companies.”
“State leaders have an obligation to ensure consumer protections exist when insurance is mandatory, not voluntary,” Rep. Rivera added. “This legislation ensures strong standards are in place and consumers are treated with honesty and fairness.”
The proposed legislation (SB 2038/HB 557) would reportedly provide much-needed protections to consumers insuring homes or automobiles, many of which previously existed in state administrative rule but were repealed in 2002. The legislation would require insurers to:
*Reinstate coverage when a policy is canceled for non-payment by the mortgage company.
*Refrain from canceling coverage for homeowners due to a water damage loss that was rectified.
*Disclose to applicants who are denied coverage the reason for denial, including information used from CLUE reports.
*Give consumers a choice in resolving claims disputes.
*Follow guidelines for handling automobile repairs and claims.
Consumers have reportedly told the Department of Financial Services they had difficulty finding replacement coverage after their mortgage company failed to pay premiums. Some consumers were required to accept more expensive, force-placed coverage obtained from their mortgage companies. Under this legislation, consumers would not be held responsible for their mortgage companies’ mistakes.
“In instances where a mortgage company fails to pay insurance premiums, it is unconscionable for an insurance company to then cancel a family’s coverage,” Gallagher continued.
To assist auto insurance consumers, the bill contains a measure to provide auto insurance companies with clear guidelines for handling automobile claims.
The bill would restore a standard of “like, kind and quality” for replacement parts, a requirement which had been in place in department rule for nearly 10 years. It also establishes standards for dealing with total loss of automobiles to ensure consumers are paid a fair price when their car is totaled in an accident.
The proposed legislation would also prohibit insurance companies from mandating arbitration as the sole claims-dispute resolution process in lieu of a consumer’s statutory right to have the claim mediated. Arbitration can place a considerable burden on the insured, both in terms of time and money, which may lead some consumers to accept what they consider an unfair settlement of their claim.
“Without options, consumers are locked into a system that stacks the deck when serious disputes arise,” Rep. Rivera noted. “Consumers should be able to purchase insurance coverage with the option to choose mediation or alternative dispute resolution as a method for reconciling claims disputes.”
Finally, the bill would create a dedicated consumer contact within the Department of Financial Services to deal with emerging sinkhole-related insurance concerns, track trends and provide information to state policymakers.
“A fair and reasonable marketplace is essential for Florida’s consumers,” added Sen. Mike Fasano, who is concerned about availability of insurance coverage for consumers in areas prone to sinkholes. “This bill recognizes the importance of hearing from consumers experiencing sinkhole-related problems, whether they are buying a home or renewing coverage.”
HB 557 unanimously passed the House Subcommittee on Insurance Regulation. The Senate version was expected to be heard Wednesday afternoon in the Senate Banking and Insurance Committee.
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