Insurance Consultants and People Not Licensed as Public Adjusters Cannot Work on Property Insurance Claims

Chip Merlin | Property Insurance Coverage Law Blog | July 2, 2017

Florida law is significantly more specific about who may work on, aid in, or prepare a claim for a policyholder. Many insurance restoration contractors, all insurance consultants, and all those non-licensed third parties who help contractors, policyholders and public adjusters with insurance claims should get ready for a new way of doing business when a new law takes effect on January 1, 2018.

The new law has other significant changes, especially regarding public adjuster apprentices, but today, I focus on the following:

19) Except as otherwise provided in this chapter, no person, except an attorney at law or a public adjuster, may for money, commission, or any other thing of value, directly or indirectly:

(a) Prepare, complete, or file an insurance claim for an insured or a third- party claimant;

(b) Act on behalf of or aid an insured or a third-party claimant in negotiating for or effecting the settlement of a claim for loss or damage covered by an insurance contract;

(c) Advertise for employment as a public adjuster; or

(d) Solicit, investigate, or adjust a claim on behalf of a public adjuster, an insured, or a third-party claimant.

Insurance Consultants, who are not licensed public adjusters or attorneys, advertise, and I suppose provide, all types of services to policyholders, contractors, and public insurance adjusters. Frequently, these unlicensed consultants act as a “back room” or “third party administrators” for contractors and public adjusters. They send, prepare, and work on property insurance claims. These acts are unlawful in many states, including Florida. The new law clarifies those who may lawfully assist policyholders in preparing and making claims. I suggest those unlicensed individuals who do this work stop or obtain a public adjuster license right away.

Restoration contractors are important. After disasters strike, communities need competent and motivated construction professionals. Restoration contractors who have pre-arranged temporary but experienced help willing to do first class work in places far from home should be congratulated for their work. Some people say they may be “storm chasers,” but the best restoration contractors do quality jobs and are a blessing when a community is devastated. Policyholders, insurance companies and the public need professional restoration workers devoted to rebuilding communities when disaster strikes.

Restoration contractors who choose to ignore this new law and who prepare, complete or file an insurance claim on behalf of a policyholder or third-party claimant should also look for a criminal defense attorney. As indicated in NAPIA Annual Meeting in San Antonio Will Discuss Water Damage Claim and Unauthorized Practice of Public Adjusting, they are breaking the law and the Florida Department of Financial Services has issued a bulletin warning of the possible penalties.

Here is a good example of a Florida contractor advertisement promising to perform illegal activity:

We specialize in insurance claims, you can rely on us to take care of your claim from start to finish. All you have to do is make the call to start the claim. We handle the rest. They make their estimate, and we make ours. We negotiate with the insurance company to find not only an agreed upon price, but also an agreed upon scope. Once everyone is on the same page, we get contracts signed, and begin work. Every company is different in how the handle claims, we work directly with your insurance adjuster to make sure that everything is done in a timely manner and gets finished properly. Giving you a stress-free insurance restoration claim process.

When dealing with unexpected damage to your home, filing an insurance claim can feel like a nightmare that never ends. Trust our team with over 10 years of insurance claim experience to handle the process from start to finish.

Our goal is to make sure the claim is payable at an amount that is large enough to restore your home to its pre-damage state.

• Fire and smoke damage

• Wind and storm damage

• Water damage

• Tree damage

• Car damage

All an enterprising State Attorney would have to do to build a case is simply send investigative subpoenas to this contractor and take statements from that contractors’ employees who solicit contracts. The State Attorney would then inquire of policyholders what the company representative told them at the time of solicitation and during the claim. The State Attorney could also send investigative subpoenas to the independent and company adjusters who negotiate the claims with the contractor to determine who wrote emails about the insurance claims and what the company representatives said and did during the claims process. This would establish whether a person not licensed as a public insurance adjuster or an attorney acted to “aid,” “prepare,” or “negotiate” the insurance claim. As an aside, I suggest that insurance adjusters should be careful not to aid those who are endeavoring to break Florida law.

I am truly surprised that the Florida insurance industry—which has complained about some of these contractors in Dade and Broward counties—has not asked why the Attorney General and the State Attorneys in those counties are not pursuing charges. Some insurance claims executives have told me that they have complained to authorities, and nothing has happened.

The bottom line:

  1. The new law strengthens previous law.
  2. The new law better protects consumers and the insurance industry.
  3. People involved in the restoration industry and those estimating and dealing with insurance companies in any way should be careful not to break Florida law.

Florida Statutes of Limitations and Repose Governing Construction Claims Revised to Clarify Accrual Dates Effective July 1

Amandeep s. Kahlon | Buildsmart | July 6, 2017

Florida’s Gov. Rick Scott signed HB 377 providing for revisions to the Florida statutes of limitation and repose governing construction claims. The new law revises Fla. Stat. Sec. 95.11 (Limitations Other Than for the Recovery of Real Property) to clear up some confusion regarding when the statutes of limitations and repose begin to run. Under the new language, Sec. 95.11(3)(c) defines the four-year statute of limitations period for construction and design claims as running from the “date of (a) actual possession by the owner, (b) the date of the issuance of a certificate of occupancy, (c) the date of abandonment of construction if not completed, or (d) the completion or termination date of the contract, whichever date is latest.” However, with respect to latent defects discovered after the dates described above, the four-year limitations period runs from the discovery of the defect.

The new statute also provides that, regardless of when a construction or design defect claim is determined to accrue for purposes of the limitations period, the claim must be brought within “ten years after the date of (a) actual possession by the owner, (b) the date of the issuance of a certificate of occupancy, (c) the date of abandonment of construction if not completed, or (d) the completion or termination date of the contract.” All construction claims must be brought within this 10-year statute of repose period.

The prior version of the statute did not define “completion date,” which created some ambiguity as to when the limitation and repose periods began to run for claims arising out of improvements to real property. The recently revised statute defines “completion date” as “the later of the date of final performance of all the contracted services or the date that final payment for such services becomes due without regard to the date final payment is made.” The revisions are intended to provide more clarity on the triggers for the applicable limitation or repose period. The added certainty should, hopefully, benefit all industry participants. The updated statute applies to all claims that accrue on or after July 1, 2017.

Polarizing Design Defect Claims Law Could Be Refined

Jason D. Salvin | Daily Business Review | June 9, 2017

On May 12, 2003, I took a leap of faith and left my job working for one of the nation’s leading general contractors to join the legal profession. Eight days later, the Florida Legislature presented then-Gov. Jeb Bush with a revolutionary bill intended to reduce litigation associated with construction and design defects claims in Florida state courts. The bill was approved by the governor a few days later, became effective on May 27, 2003, and is now commonly known in the construction industry as Chapter 558.

The original 2003 version of Chapter 558, aptly categorized as a notice and opportunity-to-cure statute, contains a legislative finding and declaration preamble in the first section (558.001) that sensibly states an effective alternative dispute resolution, or ADR, process in certain construction defect matters should involve the claimant filing a notice of claim with the builders, suppliers or designers that the claimant asserts are responsible and should provide them with an opportunity to resolve the claim without resort to further legal process.

By way of example of the firestorm of controversy and competing interests that erupted almost immediately after the inception of Chapter 558, the modest single sentence premise included in the preamble of Section 558.001 was modified by the Florida legislative body in 2004, 2006 and 2015.

The modified findings and declaration preamble included in the latest version highlight and perhaps clarify the Legislature’s intended or revised goals of reducing the need for litigation, protecting the rights of property owners, including the insurers of the accused in the Chapter 558 ADR process and specifying “confidential settlement negotiations” as part of the required “opportunity to resolve the claim.”

I can say with confidence that it appears the world has been polarized into two passionate groups: those who believe Chapter 558 works and would like to see it further refined, and those who don’t think Chapter 558 is necessary and would like to see it abolished. In my experience, critics and supporters who have dealt with Chapter 558 matters generally seem to agree that in most instances, it is beneficial to engage legal counsel as part of the Chapter 558 process in light of the risks and potential rewards inherent in the process.

Generally speaking, the simple premise of Chapter 558 to enact a fair and beneficial notice and opportunity-to-cure process has grown more complex and controversial with each iteration, and appears to be correspondingly more politically charged as the risks and rewards for the participants and nonparticipants becomes more apparent.

More Modifications

If history is indicative of future events, Chapter 558 will continue to evolve, and Florida’s immense condominium association and property management industries, contractor, supplier/manufacturer, design professional industries, and insurance and surety industries will be watching closely and, in certain instances, lobbying for further modifications to Chapter 558 and perhaps even its repeal.

The original version was revised on average of once every two years. Notwithstanding the six prior amendments, at the close of the legislative session in May, two bills which contain significant controversial changes to Chapter 558 died in committee. More specifically, Senate Bill 1164 and House Bill 1271 contained proposed changes to subsections 1, 2, 3, 7 and 10 of F.S. 558.004, including the following examples:

• Requirement for a claimant to personally sign the notice of claim, as opposed to having the notice of claim signed by the claimant’s counsel or claimant’s consultant(s);

• Requirement in the House bill for a claimant and any experts retained by the claimant concerning the claim, to be present at the Chapter 558 inspection[s] to identify the location of the alleged construction defects. The Senate bill includes a similar requirement except that it allows the claimant’s agent(s) to attend in the claimant’s place;

• Requirement that the person who is served with the notice of claim by the claimant must forward it to each contractor, subcontractor, supplier, or design professional that person who was served reasonably believes is responsible for each defect specified in the notice of claim. The current version of Chapter 558 (2015) states that the person “may serve” other entities/persons; and

• Requirement that the claimant personally sign any rejection of an offer properly served pursuant to Chapter 558, and that prior to such rejection, the claimant must serve a written demand for mediation on the person who made the offer. Unless mediation is waived by the offeror, it must take place within 20 days of the demand. Additionally, the claimant’s demand for mediation must explain why the claimant considers the offer to be inadequate.

As Florida’s next wave of construction and design defect claims approaches, Chapter 558 remains the law of the land, and it is imperative for property owners, associations, developers, designers, contractors, subcontractors, suppliers, insurers and others to understand the risks, potential rewards and the proposed legislative modifications to sensibly allocate resources and plan for the future.

Fla. Gov. Signs 2 Construction Law Bills Backed By Builders

Nathan Hale | Law360 | June 15, 2017

Construction companies applauded Florida Gov. Rick Scott’s signing Thursday of two bills that they say will open competition for state-funded projects and give builders more say and certainty on when a statutory window of liability for completed projects begins to run.

H.B. 599 preempts local laws and mandates on projects in which more than half of the funding comes from state appropriations, while H.B. 377 creates a definition of “completion of the contract,” which gives builders some say along with project owners on when the statute of repose is triggered.

The Associated Builders and Contractors, which describes itself as the largest commercial construction association in Florida, said in a statement Thursday that it been pushing for five years for the steps taken in H.B. 599, which was sponsored by Rep. Jayer Williamson, R-Pace, and in the Senate by Sen. Keith Perry, R-Gainesville.

State law requires state contracts for construction services projected to exceed $200,000 to be awarded competitively, with a threshold of $300,000 for counties, municipalities, special districts and other political subdivisions, according to legislative documents.

Local laws such as the city of Miami’s Responsible Bidder and Wage Rate ordinances have allowed municipal governments to put pre-bid mandates on contractors regarding whom they must hire, where they must train, what job fairs they have to hold and what benefits they have to offer to bid on projects, according to the ABC, which said these myriad requirements would push projects out of reach for small businesses by driving up costs.

“If taxpayers are paying for a project, the government certainly has a role to play in the bidding and selection process,” Peter Dyga, president and CEO of ABC’s East Coast Chapter, said in a statement. “But it shouldn’t limit competition or shut out qualified, licensed contractors, subs or tradesmen.”

Rep. Williamson suggested the local laws had motives beyond ensuring minimum wages and benefits for workers.

“Weeding through bidders before they even get a chance to bid so that you can award the project to groups you want is nothing other than Good Old Boy Politics,” he said in a statement distributed by the ABC. “I didn’t vote for them as a county commissioner, and I won’t as a member of the Florida House.”

The new law, which passed 77-40 in the House and 20-17 in the Senate, does not cover projects that include federal funding, among some other exceptions, according to the ABC.

H.B. 377, which was sponsored in the House by Rep. Thomas J. Leek, R-Daytona Beach, with a corresponding bill presented by Sen. Kathleen Passidomo, R-Naples, clarifies when the four-year and 10-year statutes of repose begin for bringing claims of a construction defect or latent construction defect.

The law specifies that the date of completion of a contract — one of four triggers of the statute of repose — is the later of the date of final performance of all contracted services or the date that the final payment for those services becomes due — without regard to the date that final payment is made, according to legislative records.

The Fifth District Court of Appeal had ruled in 2013 that a contract was complete under the relevant state law on the date final payment is made, according to a legislative staff report.

Project owners had exploited this ruling, by delaying making the final payment to contractors — even by a penny — to keep the clock from starting on the statute of repose.

“In many instances, this created open-ended liability for builders, increasing lawsuits and the cost of doing business,” the ABC said.

The ABC noted that the bill sailed through both chambers on its way to passing 37-0 in the Senate and 114-0 in the House.

Both laws take effect July 1.

Amendment Adds Clarity to Florida’s Construction Statutes of Limitations and Repose

Timothy N. Bench | Rumberger Kirk & Caldwell | June 20, 2017

On June 14, 2017, Florida’s Governor signed into law House Bill 377, which seeks to provide clarity to when Florida’s construction statutes of limitations and repose begin to run. The existing version of the statute, § 95.11(3)(c), Florida Statutes, provides that both the limitations period and the repose period begin to run when the later of certain specified events occurs:

  • Actual possession by the owner; or
  • The date of issuance of a certificate of occupancy; or
  • The abandonment of construction if not completed; or
  • The date of completion or termination of the contract between the professional engineer, registered architect or licensed contractor, and his or her employer, or
  • Regarding the 4-year limitations period only, if the defect is latent, when the defect is discovered or should have been discovered with the exercise of due diligence.

Unfortunately, the current version of the statute does provide a definition of “completion” of the contract. In 2015, Florida’s Fifth District Court of Appeal held in Cypress Fairway Condo. v. Bergeron Const. Co. Inc., 116 So. 3d 706 (Fla. 5th DCA 2015) that a contract is completed within the meaning of the statute, not when the work is completed, but when the final payment due under the contract is made. As a result, some owners began inserting language into contracts with the effect of extending the time for making final payment, and finding other ways to delay making final payment. The result was that limitations period as well as repose periods could be unilaterally extended almost indefinitely, which defeats the purpose of the statute, to place limits on the duration of potential liability for construction defects.

By amending the statute, the Florida Legislature has sought to prevent the purpose of the statute from being circumvented in this way, by providing a definition for when a contract is “completed.” The amended version of the statute provides that:

Completion of the contract means the later of the date of final performance of all the contracted services or the date that final payment for such services becomes due without regard to the date final payment is made.

While not a perfect solution, the amendment is certainly a significant improvement that should make it easier for litigants and their legal counsel to determine when a particular claim for construction defects is barred by the statute of limitations, or extinguished by the statute of repose.
The amendment will take effect July 1, 2017, and will apply to causes of action that accrue after that date. – See more at: