Florida Legislators Seeking New Path to Fix Homeowners Insurance

As premiums continue to soar and homeowners move their insurance policies to Florida’s insurer of last resort, Citizens Property Insurance Corp, legislators are attempting to deal with Florida’s failing homeowners insurance market.

However, the Florida Senate and House will have to figure out ow to bridge their differences and determine how far they are willing to go to make changes to local insurance laws. This may be tough as some changes could easily impact homeowners pocketbooks.

The Senate Banking and Insurance Committee and the House Insurance & Banking Subcommittee on Wednesday approved bills (SB 1728 and HB 1307) which takes steps towards moving policies away from Citizens Property Insurance to private insurers. The legislation could hit a roadblock thanks to the portion of the Senate bill which would reduce coverage for roof damage. 

The insurance industry has put the blame for ever rising premiums on less than honest roof damage claims. The Senate bill allows insurers to sell policies that will not offer replacement value coverage for roofs that are over 10 years old. These policies would reimburse homeowners for damage to their roof on an actual cash value which takes depreciation into account when setting a claim value. There would be an exception for roof damage that occurs during a named hurricane. 

State Senators on the other side of the argument contend that this proposal would hurt low-income residents who will have to cover the cost of repairing or replacing their roof if they cannot afford (or find) a replacement value policy for their roof. 

“Considering that lower-income families are more likely to own older homes, won’t this bill as currently written disproportionately affect lower-income homeowners, including some of our seniors and veterans on fixed incomes?” asked Sen. Darryl Rouson, D-St. Petersburg in a recent hearing. 

Senate Banking and Insurance Chairman Jim Boyd, a Bradenton Republican who sponsored the bill claimed that the change won’t just impact low-income families. “If you have an older home with an older roof, regardless of the value of the home, it’s still a problem,” Boyd said during a recent hearing. 

Supporters of the bill have pointed out that the homeowners insurance market in Florida is in crisis and must be dealt with or it could severely impact homeowners ability to get any insurance at all. “We are going to have to fix this problem,” Sen. Kelli Stargel, R-Lakeland, said during the hearing. “It’s not even a matter of the cost of insurance. You’re not going to be able to get insurance. That’s an even bigger problem.”

Despite the fact that lawmakers have passed laws in recent years to try to stem the tide of lawsuits, but it hasn’t solved the issue with insurers claiming they are still losing money and are requesting large rate increases or dropping policyholders altogether. 

This has led many homeowners to move their coverage to Citizens, which was created as an insurer of last resort. As of Dec. 31, Citizens had 759,305 policies which is a major leap from the 542,739 policies they had in force a year earlier. Citizens says that it could easily grow to more than 1 million policies this year. 

Citizens and state leaders would like to move a large portion of Citizens policies into the private market as Citizens puts all homeowners at risk if there is a major storm or hurricane.  If Citizens ends up running a deficit when paying claims, it could lead to all homeowners in the state having to kick in to cover their costs. 

The Senate and House bills will attempt to move policies out of Citizens. The Senate bill would make homeowners ineligible for Citizen’s coverage unless the lowest premium in the private market exceeds Citizens premium by more than 20 percent.