Several updates made to HB 305 could create additional loopholes that incentivize carriers to underpay valid property damage claims. This bill was originally introduced to curb litigation which proponents say a primary cause for the premium increases across the state.
Related: FL Lawmakers Are Being Misled On Insurance Crisis
One way legislatures are using HB 305 to limit litigation is by removing the one-way attorney statute on property damage claims. Traditionally, if a homeowner sues their insurance carrier and wins their case, the insurance company is required to pay their attorney fees. This allows the policyholder, or plaintiff in this example, to remain whole. This rule has long been used to keep insurance carriers in line and punish carriers that deploy bad faith claim practices. If HB 305 passes, insurance companies will only have to pay if the gap between what they owe and what they have paid is more than 20%.
So what happens if a valid claim is underpaid but doesn’t meet the 20% threshold? The policyholder is on the hook for their own attorney fees.
Insurance was created to ensure policyholders could remain whole after an unforeseen event, minus their deductible. If HB 305 passes, it would force policyholders to pay out of pocket to get a claim fairly paid – and this defies the logic of having insurance in the first place. Known as consequential damages, these extra costs add up quickly and may not make financial sense for those who fall into the “less than 20%” underpayment category. This allows insurance carriers to strategically underpay claims up to 20% and not have to face any consequences for doing so.
Find all updates and changes to HB 305 online here.
Florida Policyholders Need To Act Now
HB 305 and other related bills could go into effect this year. Lawmakers need to hear from policyholders NOW on the negative impacts of this legislation. Click here to connect with Florida lawmakers and make sure your rights are protected. You’ll be able to send a tailored message in less than 60 seconds to your elected officials.
