Help Stabilize the Chaotic Home Insurance Market in Florida

21 Jul

Recently, a federal judge blocked the state of Florida from enforcing a portion of their new property insurance law that was supposed to prohibit roofing contractors from advertising to potential customers. Chief U.S. District Judge Mark Walker put a preliminary injunction in place after a request from Brandon-based Gale Force Roofing & Restoration LLC. They argued the law signed by Gov. Ron DeSantis on June 11 violates their First Amendment rights by directly penalizing protected speech.

“It is also clear that the threatened injuries to plaintiff from banning plaintiff’s truthful commercial speech outweighs the state’s interest in preventing fraud, protecting consumers from exploitation, and stabilizing the insurance market,” Judge Walker wrote in his brief.

The law in question was passed on April 30th of this year and was designed to help halt ever increasing property insurance rates and to help stabilize the chaotic homeowners insurance market in Florida. 

Owner of Gale Force happy about decision

Alex Dewey, a managing partner at Gale Force, praised the court decision in a press release:

“Gale Force absolutely stands against insurance fraud of any kind, and agrees that the state should punish fraudulent actors, but that is no excuse to impose draconian restrictions on companies like Gale Force who follow the rules and simply help property owners recover when Mother Nature strikes.”

The law which went into effect on July 1st prevents contractors from soliciting homeowners to file an insurance claim through prohibited advertisements.” It also limits attorney fees, allows larger rate increases for Citizens Property Insurance Corp and reduces the time that homeowners have to file a claim on their homeowners insurance. 

The injunction only applies to the sections of the law that address communication by contractors, while leaving the rest of the law in effect. The law as written prevents contractors from soliciting homeowners via “prohibited advertisements” which includes emails, door hangers, pamphlets, and flyers. 

“While the state has the right to regulate contractors and protect Floridians from fraud, Walker wrote in his brief, “it must do so within the bounds set by the Constitution. Here, the Legislature failed to do so accordingly.”

Gale Force Roofing and Restoration advertises to homeowners to contact them for a roof inspection if they suspect storm damage. 

“Plaintiff (Gale Force Roofing and Restoration) will then truthfully convey to homeowners the nature and extent of the damage,” Gale Force claimed in their lawsuit filing. “Plaintiff will then encourage homeowners to contact their insurance company to make a claim under their residential insurance policy and execute a contract with plaintiff to assign the benefits available under the homeowner’s insurance policy to plaintiff,” they continued. 

The lawsuit also argued that the state law focuses on reducing insurance claims instead of fighting fraud. Lawmakers and supporters of the bill disagree claiming that fraudulent roof damage claims are a major factor in the states sky high homeowners insurance costs

The state argued that the advertising restrictions should be considered a reasonable restriction on commercial speech since it is combating consumer exploitation and fraud. The law restricts advertising in a very narrow way according to lawyers representing the state, “targeted digital advertisements or e-mails, door hangers, or brochures handed out in person are prohibited if, and only if, they encourage a homeowner to make a roofing insurance claim,” the lawyers argued. “Radio and television advertisements are allowed because they do not target ‘a specific person.’” 

Judge Walker Disagreed

Judge Walker disagreed with their argument. Walker stated in his brief that under the new law licensed contractors “are not allowed to encourage, instruct, or induce any consumer to contact a contractor or public adjuster for the purpose of making an insurance claim for roof damage by written or electronic means — and neither is any ‘unlicensed person,’” Walker wrote.

Gale Force countered that the new law impacts its First Amendment rights because it requires the company to stop its written advertising. “Accordingly, plaintiff is engaging in self-censorship by refraining from advertising that arguably runs afoul of the new law,” Judge Walker wrote.

Judge Walker was not impressed with the state’s argument, writing:

“In short, this court is not satisfied that the challenged law directly advances any of the state’s interests. Instead, defendant seems to suggest that because the law bans advertising that exists within the same universe as the state’s asserted interests, it directly advances those interests. But the (U.S.) Supreme Court has already rejected such a broad pronouncement. To recap, defendant has identified legitimate, substantial state interests. But none of those interests are directly implicated by contractors advertising their roofing repair services to homeowners and informing homeowners that they may have storm damage that may be covered by insurance.”

Tags: , ,