Florida homeowners get 45-day cancellation notice rule and two AOB reforms as insurance crisis deepens

In the wake of an increased risk of extreme weather in Florida, among other reasons like fraud and litigation, lawmakers have had to adjust policy to reflect changes in the state’s home insurance landscape. Insurers are scrambling to mitigate losses on their end by changing or canceling policies, coverage, and premiums, and a new bill forces companies to provide adequate advance notice before implementing adjustments, increases, or cancellations.

The other insurance policy changes in Florida involve the Assignment of Benefits reform laws and the clarification of legal standing in AOB cases, and all three are explained below.

Insurers must send advance notification of policy or premium changes

The first change in insurance policies in Florida is a result of one of the state’s largest insurers suddenly dropping a whole bunch of policyholders in a short space of time. This caused great inconvenience and stress as Floridians scrambled to find new insurers offering affordable premiums, leaving many uninsured in the process.

Senator Danny Burgess proposed the new legislation that compels insurers to provide written notice of cancellations to the policyholder’s last confirmed address at least 45 days in advance. If an email address is available, companies must notify electronically as well. Insurers must not only allow policyholders time to make alternative arrangements but also state the reasons behind the cancellation.

When it comes to the cancellation of policies due to non-payment, 10 days written notice is required. The reason also has to be supplied and clearly explained. However, this notice is not required for policies under which premiums are paid monthly.

The new law is intended to provide homeowners with more security around coverage cancellations, allowing them time to find and sign up for new policies.

Residents of the State of California are also suffering from insurance woes amid the devastation caused by the LA fires. Californians who suffered massive losses in the blazes have another nightmare to deal with: trying to get insurance companies to pay their claims.

The Sunshine State is in the middle of an insurance crisis

There are several factors that resulted in the insurance upheaval and skyrocketing premiums in Florida, including:

• Climate change, which leads to an increased risk and severity of natural disasters like hurricanes.
• Widespread fraud, which results in insurers having to recoup losses in other ways.
• Excessive litigation, which also means that costs must be gathered by other means.

In the face of rapidly increasing costs and rising disaster risks, several major insurers have reduced or canceled coverage in high-risk regions.

Florida State Senator and Senate President, Republican Ben Albritton, had some strong words about the situation:

“Floridians have been faithfully paying insurance premiums for years, sometimes decades, and now they expect their insurance company to keep up its end of the bargain. I want to make sure that impacted Floridians and insurance companies hear me loudly and clearly—we are watching … I’m not going to sit idly by if legitimate claims get denied while rates continue to rise. Period.”

Enforcement of AOB reform laws

The 2019 Assignment of Benefits (AOB) reform laws state that contracts that fail to meet statutory requirements, such as the scope of work, estimated costs, and notices about the insured’s right to cancel the agreement, are invalid.

The decision covers two goals: reducing AOB fraud and litigation. This should go some way towards lowering insurance premiums because insurance companies will have fewer costs to recoup by increasing premiums.

Clarification of legal standing in AOB cases

The court ruled that entities that do not provide direct services for repairing, protecting, or restoring property cannot sue insurers under invalid AOB agreements. This means that organizations can’t misrepresent or deliberately misinterpret agreements to bypass legal industry standards. This is positive for consumers as it offers them protection in legal disputes.

These policy changes should go some way toward easing the stress that Floridians are feeling due to insurance complications and compel insurers to give their clients more consideration.

In more news about a different kind of insurance in Florida, car owners in several states, particularly California, are likely to pay much more for car insurance due to new laws raising the required minimum coverage.