Lawmakers Consider Additional Changes to Florida Property Insurance Laws

There was an overhaul to the property insurance scheme in Florida last year, which helped the insurance companies more than Florida homeowners. Homeowners have continued to face troubles finding adequate and affordable coverage for their properties. Even with adequate coverage, homeowners are still facing the trouble of having valid claims accepted by their insurance company, facing denial and eventual litigation to have their property restored. In addition, homeowners are now seeing an abundance of nonrenewal notices from their property insurance carriers as carriers continue to flee Florida.

Lawmakers have yet again taken interest, but seem to be concerned with catering to large insurance corporations rather than protecting homeowners. Two bills are currently making their way through the legislature and on their way to becoming law: Senate Bill 1728 and Senate Bill 186.

As currently written, Senate Bill 1728 would significantly impact homeowners. Most notably, it would allow insurers to offer policies that only cover the actual cash value of a roof, rather than a full replacement cost, which is required for most policies under current law. The Bill still requires full replacement coverage for any roof that is less than ten years old, a total loss caused by a "covered peril," or a loss caused by a named hurricane. If a roof is older than ten years, the insurer may provide reimbursement for repair and installation based on the roof's age, using depreciation amounts that are justified and do not exceed 4% annually, unless justified. The Bill fails to define what exactly "justified" means, as many metal and tile roofs have lifespans of up to fifty years if properly maintained. Furthermore, insurers may change homeowner's policies to an actual cash value policy at renewal if the roof is at least ten years old and they notify the policyholder. Of course, this creates additional issues for homeowners seeking full replacement coverage, as they will now be forced to seek adequate coverage in an unaffordable insurance market.

Senate Bill 1728 also comes with changes to coverage offered by the "insurer of last resort," Citizens. If passed as written, Citizens would be able to deny homeowners coverage unless the other insurer premiums are 20% greater than the premium offered by Citizens. This is a drastic change from present law, which allows Citizens to offer personal lines residential risk coverage if other insurance premiums are equal to or less than Citizens' premium for comparable coverage. These changes will also apply to commercial lines. Citizens will also be able to drop homeowners from coverage if they receive an offer at renewal from another insurer which is at or below the 20% eligibility threshold. This again is troublesome for homeowners, as it does not guarantee they will be offered the same coverage and their premiums may still increase due to the 20% threshold.

On the other hand, Senate Bill 186 also brings significant negative changes to homeowners, especially those presently insured by Citizens. As written, this Bill would allow Citizens to charge up to a 25% surcharge on their insureds if they are projected to hit a deficit. Citizens would also be entitled to engage in a more aggressive form of "depopulation," where they attempt to find private insurers for their insureds. Presently, Citizens is limited to offering their insureds insurance policies with Florida authorized insurers, however this new bill would allow other insurers to participate in the program if they comply with particular guidelines.

Citizens will also be entitled to deny coverage for individuals with a home with a dwelling replacement cost above $700,000, or a single condominium that has a combined dwelling and contents replacement cost above $700,000 if "comparable" coverage from another insurer is offered at a premium no greater than charged by Citizens. The bill fails to define what "comparable" means exactly, but it is possible homeowners could be left with lesser coverage than they had with Citizens.

Overall, these two bills appear to be more attractive for insurance companies than homeowners, yet again.

This article is not intended to be legal advice nor create an attorney-client relationship.