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New Florida Regulations Place Unconstitutional Restrictions on Public Adjusters

New state regulations targeting Florida property adjusters may be unconstitutional and serve only to hurt homeowners, according to a lawsuit filed in December 2011 by Eduardo Rodriguez. Rodriguez serves as the president of a leading Florida public adjuster firm based in Miami, Florida. The provisions of Florida Senate Bill 408 delivers a range of concessions aimed at attracting insurance companies to the state after the major hurricanes in 2004 and 2005 drained profits from the coffers of many existing insurers in Florida. However, these concessions also include provisions that appear to be intended to reduce the role of the Florida public adjuster in helping policyholders obtain the best possible settlement for their claims. This may leave homeowners without adequate expert representation in their dealings with the state-supported Citizens Property Insurance Corporation, the insurer of last resort for many Florida property owners.

A concerted pattern of attack

Senate Bill 408 (SB408) was signed into law by Governor Scott in May 2011, following close on the heels of another piece of legislation designed to target Florida property adjusters. Publicized as a reform bill for the public adjuster industry, Senate Bill 2264 incorporated many of the same provisions as the later SB408 legislation. Although the previous bill died in committee in the Florida House of Representatives in 2010, the scapegoating of the Florida public adjuster industry and home insurance policyholders in Florida had just begun. The provisions of SB408 are designed specifically to benefit insurers at the expense of the average homeowner in Florida.

Unconscionable financial burdens

The new regulations enacted under SB408 prevent any payment for Florida adjusters until and unless the Citizens Property Insurance Corporation makes an offer on the claim and then limits payment to ten percent of the added value of the claim over the original offer. Citizens Property Insurance is also entitled to receive a copy of the private contracts between policyholders and public adjusters regarding homeowner claims against policies they administer. As few public adjusters can afford to work for free over an extended period of time, this effectively prevents Florida homeowners from easily obtaining the assistance they need from public adjusters in the state and puts the balance of bargaining power squarely on the side of the monolithic Citizens Property Insurance Corporation.

The ripple effect

Changes to existing legislation due to the provisions of SB408 also included restrictions on the ways that the Florida public adjuster community can advertise their services and the types of logos they can choose for their corporate identity. Public adjusters must now refrain from mailing notices about their services for thirty days after catastrophic events including hurricanes and other incidents causing major and widespread property damage. The word Advertisement must also be included in all print ads in red ink and in at least a 14-point font, a restriction not placed on other advertisers and one that creates a negative impression on readers. Finally, a bolded and capitalized disclaimer must be included in all Florida public adjuster advertisements in print media. The overall effect of these provisions is to marginalize the public adjuster in the general community and to make homeowners feel less comfortable in enlisting the help of these professionals in taking on the insurance companies and getting the compensation they pay for and deserve.

An unbalanced playing field

Without the services of a professional Florida public adjuster, homeowners typically receive smaller settlements and reduced consideration of their property insurance claims. Especially when dealing with a massive government-backed corporation like Citizens Property Insurance, policyholders need this expert advice and assistance in order to receive fair payment for their losses. These recent rounds of legislation are intended to remove that level of assistance for homeowners and provide added bargaining power for the insurance companies, especially the state-funded Citizens Property Insurance Corporation.

Limits on property claims

New time limits have also been established for claims; the previous five-year time limit has been shortened to two years for sinkholes and three years for hurricane damage claims. One part of this legislation even prevents insurance regulators from requesting that insurers charge homeowners less for commissions and other fees, an obvious limit on free speech on the part of these individuals. Policyholders will also be required to pay a portion of the cost of sinkhole testing and may not be covered against these geological mishaps for any buildings other than the main building on the insured property.

Added costs for homeowners

The provisions of SB408 also include allowances for insurance companies doing business in the state that could potentially boost the cost of private homeowner’s insurance policies by as much as 15 percent multiple times each year. Insurance experts predict that Florida homeowners will be subject to these rate hikes with greater frequency and at higher rates than in previous years. These changes may have been intended to improve the overall appeal of the state for private insurers, but are likely to create even more financial burdens for homeowners and further damage to the already struggling housing industry.

The long-term and enduring effects of this legislation on the rights of homeowners to obtain fair representation in negotiations with insurance companies cannot yet be determined. However, the provisions of this legislation appear to be a comprehensive and concerted attack on both homeowners and property adjusters in an effort to take still more power out of the hands of the individual and transfer it to the state-run and private insurance companies. Without the assistance of Florida public adjusters, many policyholders may be left without proper representation and at the mercy of these large financial corporations when pursuing their claim for compensation.

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