Florida Senate - 2026 SB 1240 By Senator Davis 5-01562-26 20261240__ Page 1 of 6 CODING: Words stricken are deletions; words underlined are additions. A bill to be entitled 1

An act relating to insurance regulation; amending s. 2 627.4025, F.S.; making clarifying changes regarding 3 the definition of residential coverage; amending s. 4 627.418, F.S.; prohibiting insurers from imposing or 5 enforcing certain policy conditions or requirements; 6 providing an exception; specifying that such 7 conditions or requirements are void; requiring 8 insurers to make certain disclosures and allow the 9 insured to cancel the policy under certain 10 circumstances; amending s. 627.426, F.S.; revising the 11 conditions under which liability insurers may deny 12 coverage based on a particular coverage defense; 13 amending s. 627.70131, F.S.; revising the timeframe in 14 which insurers must pay or deny claims; revising 15 requirements for the explanation for the payment, 16 denial, or partial payment; specifying that insurers 17 have an obligation to pay a specified amount under 18 certain circumstances; authorizing the Department of 19 Financial Services to enforce such obligation; making 20 a clarifying change regarding interest payments; 21 providing an effective date. 22 23 Be It Enacted by the Legislature of the State of Florida: 24 25

Section 1. Subsection (1) of

section 627.4025, Florida 26 Statutes, is amended to read: 27 627.4025 Residential coverage and hurricane coverage 28 defined.— 29

Florida Senate - 2026 SB 1240 5-01562-26 20261240__ Page 2 of 6 CODING: Words stricken are deletions; words underlined are additions.

(1) Residential coverage includes both personal lines and 30 commercial lines coverage.

Personal lines residential coverage 31 includes residential coverage, which consists of the type of 32 coverage provided by homeowner, mobile home owner, dwelling, 33 tenant, condominium unit owner, cooperative unit owner, and 34 similar personal lines residential policies., and Commercial 35 lines residential coverage includes, which consists of the type 36 of coverage provided by condominium association, cooperative 37 association, apartment building, and similar commercial lines 38 residential policies, including policies covering the common 39 elements of a homeowners association.

Residential coverage for 40 personal lines and commercial lines as set forth in this

section 41 includes policies that provide coverage for particular perils 42 such as windstorm and hurricane or coverage for insurer 43 insolvency or deductibles. 44

Section 2. Subsection (3) is added to

section 627.418, 45 Florida Statutes, to read: 46 627.418 Validity of noncomplying contracts.— 47

(3) An insurer may not impose or enforce any policy 48 condition or requirement that is not authorized by this 49 insurance code unless the condition or requirement has been 50 submitted to and approved by the office. Any such unauthorized 51 condition or requirement is void and unenforceable. If a policy 52 contains any condition or requirement not authorized by this 53 insurance code but approved by the office, the insurer must 54 clearly disclose such provision to the insured at the time of 55 issuance along with necessary

definitions to understand the 56 provisions of the policy and the steps required for compliance 57 with the provisions of the policy, using plain language, and 58

Florida Senate - 2026 SB 1240 5-01562-26 20261240__ Page 3 of 6 CODING: Words stricken are deletions; words underlined are additions. must allow the insured to cancel the policy within 10 days after 59 receipt at no cost. The disclosure must include the following 60 notice, printed in bold type: 61 62 IMPORTANT NOTICE: SOME PROVISIONS IN THIS POLICY ARE 63 NOT ESTABLISHED BY FLORIDA STATUTES. FAILURE TO MEET 64 THESE CONTRACTUAL REQUIREMENTS MAY AFFECT YOUR 65 COVERAGE OR RESULT IN CLAIM DELAY OR DENIAL. YOU HAVE 66 RIGHTS UNDER FLORIDA LAW. YOU MAY CANCEL THIS POLICY 67 WITHIN 10 DAYS AFTER RECEIPT AT NO COST. 68

Section 3. Subsection (2) of

section 627.426, Florida 69 Statutes, is amended to read: 70 627.426 Claims administration.— 71

(2) A liability insurer may shall not be permitted to deny 72 coverage based on a particular coverage defense unless all of 73 the following conditions are met: 74 (a)1.

Within 30 days after the liability insurer knew or 75 should have known of the coverage defense, written notice of 76 reservation of rights to assert a coverage defense is given to 77 the named insured by United States postal proof of mailing, 78 registered or certified mail, or other mailing using the 79 Intelligent Mail barcode or other similar tracking method used 80 or approved by the United States Postal Service sent to the last 81 known address of the insured or by hand delivery. Such notice of 82 reservation of rights must include all the following: 83 a.

A clear statement of the factual issue giving rise to 84 the reservation of rights. 85 b. An explanation, in plain language, of why the issue may 86 affect coverage. 87

Florida Senate - 2026 SB 1240 5-01562-26 20261240__ Page 4 of 6 CODING: Words stricken are deletions; words underlined are additions. c. A description of any additional information or 88 documentation needed from the insured. 89 d. A description of the next steps in the investigative 90 process and the expected timeframes for completing those steps. 91 e. If the insurer determines that fraud or 92 misrepresentation may affect the claim, identification of the 93 specific facts supporting that determination. 94 2. A notice of reservation of rights given under this 95

section may not be used to extend, delay, or suspend the payment 96 of a covered loss or any statutory deadline for paying or 97 denying a claim under this code.; and 98 (

b) Within 60 days after of compliance with paragraph (a) 99 or receipt of a summons and complaint naming the insured as a 100 defendant, whichever is later, but in no case later than 30 days 101 before trial, the insurer: 102 1. Gives written notice to the named insured by United 103 States postal proof of mailing, registered or certified mail, or 104 other mailing using the Intelligent Mail barcode or other 105 similar tracking method used or approved by the United States 106 Postal Service of its refusal to defend the insured; 107 2.

Obtains from the insured a nonwaiver agreement following 108 full disclosure of the specific facts and policy provisions upon 109 which the coverage defense is asserted and the duties, 110 obligations, and liabilities of the insurer during and following 111 the pendency of the subject litigation; or 112 3. Retains independent counsel which is mutually agreeable 113 to the parties. Reasonable fees for the counsel may be agreed 114 upon between the parties or, if no agreement is reached, shall 115 be set by the court. 116

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Section 4. Paragraph (

a) of subsection (7) of

section 117 627.70131, Florida Statutes, is amended to read: 118 627.70131 Insurer’s duty to acknowledge communications 119 regarding claims; investigation.— 120 (7)(

a) Within 30 60 days after an insurer receives notice 121 of an initial, reopened, or supplemental property insurance 122 claim from a policyholder, the insurer shall pay or deny such 123 claim or a portion of the claim unless the failure to pay or 124 deny is caused by factors beyond the insurer’s control of the 125 insurer.

The insurer shall provide a clear, written reasonable 126 explanation in writing to the policyholder which outlines the 127 reasoning of the basis in the insurance policy, in relation to 128 the facts or applicable law, for the payment, denial, or partial 129 denial of the a claim, referencing relevant sections of the 130 insurance policy, applicable facts, or laws. Such explanation 131 may not be solely a recitation of policy provisions without 132 application of those provisions to the facts of the claim.

If 133 the insurer’s claim payment is less than specified in any 134 insurer’s detailed estimate of the amount of the loss, the 135 insurer must provide a reasonable explanation in writing of the 136 difference to the policyholder.

Any payment for of an initial or 137 supplemental claim or portion of such claim made 60 days after 138 the insurer receives notice of the claim, or made after the 139 expiration of any additional timeframe provided to pay or deny a 140 claim or a portion of a claim made pursuant to an order of the 141 office finding factors beyond the insurer’s control of the 142 insurer, whichever is later, bears interest at the rate set 143 forth in s. 55.03. Interest begins to accrue from the date the 144 insurer receives notice of the claim. If the insurer fails to 145

Florida Senate - 2026 SB 1240 5-01562-26 20261240__ Page 6 of 6 CODING: Words stricken are deletions; words underlined are additions. pay the full amount owed on the claim within 90 days after the 146 insurer receives notice of the claim or within any extended 147 timeframe authorized by order of the office, the insurer has an 148 uncontestable obligation to pay the amount owed, together with 149 interest as provided in this subsection and an additional equal 150 interest penalty.

The department may enforce such obligation. 151 The provisions of this subsection may not be waived, voided, or 152 nullified by the terms of the insurance policy. If there is a 153 right to prejudgment interest, the insured must select whether 154 to receive prejudgment interest or interest under this 155 subsection. Interest is payable when the claim or portion of the 156 claim is paid, even if the payment is contingent upon a release. 157 Failure to comply with this subsection constitutes a violation 158 of this code.

However, failure to comply with this subsection 159 does not form the sole basis for a private cause of action. 160

Section 5. This act shall take effect July 1, 2026. 161