As insurance rates continue to skyrocket in Florida, state legislators passed a law that aims to stop the price hikes, but will affect roofing in Florida and potentially other states in the process.

Florida Gov. Ron DeSantis signed Senate Bill 2-D on May 26, which includes measures to provide relief to insurance companies struggling with claims and help homeowners not only strengthen their homes, but find solutions for costly roofing scams. DeSantis’ signing followed a special legislative session on insurance where lawmakers approved of the bill in a matter of days with bipartisan support, hailing it as a step in repairing a market overrun with rising insurance costs and canceled policies.

“This package represents the most significant reforms to Florida’s homeowners insurance market in a generation,” said DeSantis. “These bills will help stabilize a problematic market, help Floridians harden their homes through the My Safe Florida Home Program, and pave the way for more choices for homeowners.”

Even with the law in place, insurance prices aren’t expected to drop for another 12 to 18 months, and homeowners can expect further price hikes and difficulties with obtaining coverage.

Roofing Regulations

Trent Cotney, a partner at Adams and Reese, said the law will undoubtedly affect restoration and roofing contractors who do insurance-related work. He points out that, previously, if repairs were being made to a roof that is more than 25% damaged, the entire roof needed to be replaced. The law modifies this so that if a roof is more than 25% damaged but complies with the state’s 2007 building code, it only needs to be repaired.

“It did ease that threshold requirement, which is going to make it more difficult to obtain a full roof replacement,” said Cotney.

The law prohibits insurance companies from automatically denying coverage solely based on the age of a roof so long as it’s less than 15 years old. Similarly, if the roof has at least five years of life remaining, insurers can’t refuse to issue a policy.

Homeowners with roofs that are 15 years or older must be allowed to have an inspection before requiring a replacement as a condition of writing or renewing the policy. Similarly, the law authorizes property insurers to limit certain roof claim payments under certain circumstances.

Along with these changes, the law hopes to put a stop to roofing scams. In March, two Florida contractors were arrested for allegedly enticing homeowners with rebates to cover their insurance deductible if they submitted a full roof replacement claim to their property insurance company. To address potential roofing scams like these, contractors using advertisements to encourage consumers to contact them for the purpose of making an insurance claim for roof damage must include information stating:

• Consumers are responsible for paying the insurance deductible.
• It’s insurance fraud punishable as a felony for a contractor to knowingly pay, waive or rebate all or part of an insurance deductible.
• It’s insurance fraud to intentionally file an insurance claim containing any false or misleading information.

“There are some bad actors out there in the restoration market,” Cotney said. “I think that a lot of the impetus for these bills was targeted based on those few bad actors.”

There are items that may help the good actors, including $150 million for the My Safe Florida Home Program, which provides grants to Florida homeowners for hurricane retrofitting. This is coverage provided at no cost to the insurer.

The $2 billion in reinsurance funding the law provides helps insurance companies share risks, which decreases the risk that a company becomes insolvent after being hit with massive amounts of storm damage claims. This gives a peace of mind to consumers as well, as they know they’ll be covered.

“I’ve been following it, I think there’s some good things that came out of this legislation,” Cotney said.

Legal Challenges

Insurers often blame litigation and attorney fees as the reason for cost increases. In light of this, the law addresses "assignment of benefits." An assignment of benefits allows homeowners to sign over insurance claims to contractors, who in turn seek payment from insurance companies. This process often results in lawsuits. According to the National Association of Insurance Commissioners, Florida makes up about 8% of all insurance claims nationwide, but are 76% of the lawsuits nationwide.

Previously, contractors could recoup attorney fees from insurers if a lawsuit is successful. Under the new law, this is no longer the case when they’re assigned benefits. Homeowners, however, can still recover prevailing party fees if they file a lawsuit against insurers.

“The idea there is that if you take away the ability to get your attorneys’ fees or reduce the multipliers that you can get, then that decreases the incentive to file these types of claims against insurance companies,” Cotney said.

Legal challenges are already underway. The Restoration Association of Florida and Air Quality Assessors filed a lawsuit in Leon County circuit court. The lawsuit argues the actions taken to limit attorney fees could limit or prevent contractors from pursuing legal action for unpaid invoices.

Time will tell whether the roofing and attorney-based issues addressed in the law are at the root of the rising costs. Regardless, Florida’s role as a bellwether for insurance policies means that similar laws may start popping up in other states.

“The insurance companies love to use Florida as a test ground, so I do anticipate that the next move for insurance companies would be probably places like Georgia or Texas — Texas is a huge insurance market, as is Colorado,” Cotney said. “What comes out of California on the west or Florida on the east, it all moves over, and that’s the key thing — it’s not a Florida-centric type bill … it is something you might need to worry about in the future.”