Revisions to Policy Forms

In recent years, many clients have taken a proactive approach to some of the more challenging coverage issues insurers have had to face. The adoption of new policy forms specifically excluding or limiting liability for mold claims represents one example of this approach. Other examples include recent revisions to the coverage for sinkhole losses. In light of the court decisions construing the language of the policies in determining coverage, this is the only appropriate response to take.

However, you should be aware of the legal implications under Florida Statute §627.4133 when such revisions are made to policy forms where an insured has been previously covered under the former policy forms.

U.S. Fire Ins. Co. v. Hartford Ins. Co., 710 So.2d 130 (Fla. 5th DCA 1998) holds that a change in policy forms resulting in new exclusions or coverage limitations constitutes a non-renewal of the original policy for purposes of the statute. This statute requires forty-five (45) days advance notice of the non-renewal of a policy. Where an insurer fails to provide the requisite forty-five (45) days notice, the previous coverage remains in effect until forty-five (45) days after notice is given to the insured of the non-renewal or until the insured obtains replacement coverage, whichever comes first. If the insured is never provided notice of the “non-renewal” of the previous policy, then the coverages and exclusions under the new policy forms have no legal effect.

The Supreme Court of Florida has stated that “the general rule in Florida is that upon each renewal of an insurance policy an entirely new and independent contract of insurance is created.” Marchesano v. Nationwide Property & Casualty Ins. Co., 506 So.2d 410, 413 (Fla. 1987). In that decision, the Supreme Court held that “Absent notice to the contrary, the insured is entitled to assume that the terms of the renewed policy are the same as those of the original contract.” Under the circumstances outlined above, the Marchesano decision and Florida Statute §627.4133 mean that a new policy form containing revised exclusionary language or limitations of coverage will have no legal effect unless and until the insurer has provided the statutory forty-five (45) days notice of non-renewal.

For insurers drafting new policy forms addressing coverage issues and responding to the construction of policy coverages by courts in Florida, there must be compliance with Florida Statute §627.4133 in order for those new policy forms to be upheld. Company underwriters must be aware of this legal requirement and ensure compliance with the statute in order for those new policy forms to apply. At the time of renewal, at least forty-five (45) days advance notice must be given to the insured indicating that the previous coverage will be non-renewed and a new policy form implemented.

If you have any questions or concerns about this issue, please feel free to contact our office.