Illinois Legislative Committee Report
Legislative Committee Chair Barry A. Parks is planning to attend as many possible Illinois Senate and House sessions to report back to NAIIA. You can view the Illinois Senate Calendar and Illinois House Calendar online.
If you would like to participate in the Legislative Committee meetings, please contact Barry Parks at firstname.lastname@example.org.
Recent Changes in Florida Law Regarding Roofing Contractors
NAIIA recently reported on changes to Florida law relating to regulations affecting roofing contractors. To provide further context about this recent change, NAIIA reached out to attorney John Eggum of Foran Glennon. Mr. Eggum represents insurers in property coverage and bad faith lawsuits around the country.
NAIIA: To get us started, could you give our members some background on Florida Senate Bill 76 as it relates to roofing contractors?
Eggum:The backdrop to Florida Senate Bill 76 is that the Florida Office of Insurance Regulation reported that Florida domestic property insurers were on pace to double their losses in 2020 compared to 2019, and net underwriting losses have continued for the fifth year since 2015. The Florida Senate Bill Analysis and Fiscal Impact Statement for SB 76 indicated a strong concern with the trend, and found a legislative need to address litigated claims and claim solicitation. Essentially, SB 76 was the Florida Legislature’s way of saying they are seeing a number of varied issues with property coverage litigation and property claims, and the legislature is going to try to address several of those issues with one bill.
NAIIA: Is it the case that SB 76 addressed more than just roofing contractors then?
Eggum: Yes, the bill hits on several different issues. While we are focusing this discussion on roofing contractor issues, anyone managing or involved with property litigation in Florida will want to take a close look at SB 76 and the various statutory provisions it amends, because there are several changes to the law made by SB 76, including the creation of some presumptions that relate to fee awards sought by policyholder attorneys, and a new framework about insurer duties after a claim is denied. Actually, the roofing contractor provisions were an addition to the bill – when it was first filed at the beginning of 2021, the bill did not contain those provisions. They were added later during legislative negotiations.
NAIIA: Focusing on the roofing contractors, what does SB 76 actually do?
Eggum: The first thing to understand is that the bill focuses on residential property owners and their interactions with contractors. I should note that we have referenced roofing contractors, but the bill impacts all licensed contractors. We’re just referring to roofing contractors because the bill is focused on residential roofs.
There are four main things that SB 76 does. First, it restricts direct solicitation by contractors. By direct, I mean in-person solicitation, email communication, telephone calls, and any other “real-time” communication directed to a specific person. The Florida legislature seems like it was really trying to deter door-to-door solicitations with this bill. The new law prohibits contractors from soliciting business with “prohibited advertisements”, which means any communications to a consumer that encourage, instruct, or induce a consumer to contact a contractor to file an insurance claim for roof damage. The term “prohibited advertisement” is broadly defined to include any written or electronic communication by a contractor, and it specifically stated to include door hangers, magnets, pamphlets, emails, and even business cards.
The second thing SB 76 does is create a number of “prohibited practices” for contractors. Contractors cannot offer anything thing of value in exchange for allowing the contractors to conduct an inspection of a roof, or for making an insurance claim for damage to a residential roof. The concept of “any thing of value” is broad – it prohibits offering to waive or cover the homeowner’s deductible, and it prohibits rebates, gifts, gift cards, cash, and coupons. The law also restricts referral fees, inducements, and rewards. It is a violation of the statute to offer, deliver, receive, or accept money in exchange for the referral of any services for which property insurance proceeds are payable. This appears targeted at allowing contractors to hire or make arrangements with third-parties to work-around the prohibitions put into place by SB 76.
The third change to the law enacted as part of SB 76 is a requirement that contractors provide good faith estimates at or before the time they enter into an agreement authorizing repairs. These estimates must be itemized and contain a detailed cost of services and materials for repairs that are to be undertaken. It is still an estimate – the final cost may differ – but vague, blanket authorizations to start work are prohibited.
The fourth change is a restriction on contractors engaging in unlicensed public adjusting. While it seems obvious that this was already prohibited, this is an important clarification. Unless the contractor is also a licensed public adjuster, the contractor cannot interpret the policy or provide the policyholder with advice about coverages or duties under the policy, and the contractor cannot help the insured adjust the claim or act on the insured’s behalf to adjust the claim.
NAIIA: Does the Florida bill have any teeth or enforcement mechanism?
Eggum: Well, yes, although there is a pretty big caveat to that at the moment. The bill provides for $10,000 fines for violations of its provisions and contractors are subject to “license discipline” from the Department of Business and Professional Regulation in Florida. However, here’s the caveat – the bill is not currently enforceable for the most part.
Just ten days after the Florida Governor signed the bill into law, a contractor sued Florida and alleged that the law violates the free speech provisions of the First Amendment with regard to the “prohibited advertisement” provisions. On July 11, 2021, a federal court in Florida entered a preliminary injunction against enforcement of most of the law. That matter is still be litigated, but the preliminary injunction means the State of Florida may not enforce the restrictions for the time-being. The restrictions on providing “any thing of value” and referral fees, prohibiting unlicensed public adjusting, and good faith estimate provisions are in force, but the advertising and solicitation provisions of the act are subject to the injunction, meaning they are not enforceable right now. So contractors remain free to advertise and conduct door-to-door solicitations at the moment.
I would say there is a long road ahead on this, because whatever the trial court outcome, there is likely to be an appeal. I think it is unlikely to see a final resolution before 2023.
NAIIA: What should our members do if they have further questions about this?
Eggum: I’m always happy to talk to anyone about legislative issues affecting the insurance industry, as those developments are important to be aware of because there can be crossover with my coverage and bad faith litigation. Email is usually the best way to get a hold of me, at email@example.com.
NAIIA: Great, thank you. And for our NAIIA members and other readers, legislative inquiries and issues can be directed to Barry Parks. My email is firstname.lastname@example.org. We at NAIIA will continue to monitor the developments relating to SB 76 and other interesting legislation throughout the country.
Mr. Eggum is an attorney licensed in the State of Illinois. He is based in Foran Glennon’s Chicago office. Mr. Eggum’s statements, opinions and views are his own and do not represent the statements, opinions, or views of his firm or any client or other person or entity. The discussion reflected herein is for informational and educational purposes only, and should not be considered legal advice. Please consult an attorney for advice on how SB 76 and otherwise applicable law affects you or relates to any particular factual situation or circumstance.