Florida Property Insurance

For average home owners, and real estate investors in particular, Florida’s property insurance is not a pretty picture to look at. Years of reform promises, rate reduction promises and guaranteed coverage promises have amounted to nothing. A very powerful insurance lobby has been able to consistently bulldoze an ineffectual legislature and governors. Even when some meaningful rules changes have slipped through, the insurance industry has been able to get them overturned within a short time.

2010 is looking very much like more of the same all over again. Florida citizens are hurting badly from years of stiff premium increases caused by hurricane damage, some of the highest unemployment in the nation and astronomical numbers of foreclosures because of the inability to refinance Adjustable Rate Mortgages(ARM”s). What better time for Big Insurance to go on the offensive? The insurance industry is backing Bill 1447 this legislative session. This bill would limit the insurance payout for sinkhole damage claims to 25% of the total available coverage. A more expensive “catastrophic” policy would be needed to provide adequate coverage in sinkhole-prone areas(which covers a large part of Florida). Lack of catastrophic coverage could mean many more families and/or investors losing properties because they cannot needed afford repairs.

SB 2044 is also backed by the insurance companies. This bill would allow payment of “Actual Cost Value” for any damage claims rather than the currently required “Replacement Cost Value”. Instead of collecting repair funds from their insurance based on estimates of material and labor and then proceeding with the work, the proposed bill requires home owners to pay for the repairs out-of-pocket and then be reimbursed by their insurance only for the amount they can prove with receipts. So the insurance companies would not only get to keep the money longer but would also get to pocket any difference between ACV and RCV if the property owner found a bargain on material or labor.

Yet another proposed rules change would allow insurers to impose limited rate increases without review by state regulators. An attempt by some legislators to give the Consumer Insurance Advocate’s office greater power over insurance rate increases has already been shot down.

Let’s all hope the legislature finds some backbone and a little sympathy for the citizens they were elected to represent. Usually it seems our elected officials pay a lot more attention to the money the lobbyists can contribute to their re-election funds than to their obligations of office. It will be an interesting, and possibly expensive, year for home owners in Florida.