Pay Close Attention to Your Policy Renewal – Third DCA Ruling Could Affect Claims Made Prior to 2018
A recent ruling from Florida’s Third District Court of Appeal addresses revisions made to Florida insurance law governing advance written notice by the insurer. The decision is concerning for policyholders, potentially limiting their coverage and costing them a significant amount of money.
Prior to 2011, insurers seeking to continue coverage with material changes in terms to existing policies had to first file a notice of non-renewal and then offer replacement policies with the new terms. The Florida legislature decided the process would be easier if insurers could simply provide a notice to insureds letting them know of changes to the policy. This led to the creation of Section 627.43141, Florida Statutes, allowing a “Notice of Change in Policy Terms.”
In People’s Trust Insurance Company v. Nakia de las Mercedes Lavadie, People’s Trust Insurance Company (“PTIC”) sent the Insureds a renewal package that included a “Notice of Change in Policy Terms.” The notice simply encouraged the Insureds to “carefully review the changes described below along with the enclosed policy,” and informed the Insureds that, “Your policy, in its entirety, has changed.” The Court held that PTIC’s notice complied with statutory notice requirements even though an explanation of the specific change to the policy was not provided to the policyholder.
The Court reasoned that Section 627.43141, as in effect at the time of the subject policy, only required the insurer to notify the insured and the insured’s agent in writing that the policy for the new policy period would be different, but it did not require the insurer to identify every amendment to the form. Nothing prevented the insurer from summarizing one or more individual changes, but neither did anything require the insurer to provide a more generic summary of a particular change.
It was not until 2018 that the Florida Legislature amended Section 627.43141, including a new requirement that the insurer must give the insured advance written notice summarizing a change in an insurance policy. In its order, the Court went further to delineate the revision, and acknowledged that the 2018 bill analysis stated the effect of the proposed amendment requiring advance written notice “summarizing” the change:
As a result of this ruling, a notice of change in policy terms prior to 2018 does not need to include a notice summarizing the change to be legally sufficient. Policies issued prior to 2018 are not subject to this summary requirement.
The statute’s broad requirements and its approval by Florida courts could have far-reaching implications for policyholders. Reading the policy renewal documentation and understanding how the policy conditions, exclusions, and other provisions apply is crucial. It is important for policyholders to discuss any proposed changes to their policies with their insurance agent and find out how those changes could affect their coverage in the future.
As always, should you have any questions, need any additional information, or wish to discuss these issues in further detail, please do not hesitate to contact our office.