Advertisements

New bill in Florida aims to help cut the cost of homeowners’ insurance premiums

by Celia

Florida legislators are seeking creative solutions to address the escalating challenges faced by the state’s homeowners regarding insurance costs. The surge in the frequency and severity of hurricanes has prompted numerous insurers and reinsurers to exit the Sunshine State, contributing to a substantial rise in insurance premiums.

Recent data from the Insurance Information Institute reveals that Floridian homeowners now pay an average of nearly $4,000 annually for insurance, nearly three times the U.S. average. In some cases, homeowners have witnessed their insurance costs more than triple.

Advertisements

In response to this pressing issue, State Representative Alina Garcia, a Republican from Miami, has introduced House Bill 809, complemented by Senate Bill 1070, with the aim of alleviating insurance costs for homeowners in the state.

Advertisements

If approved, the bills would prohibit insurance carriers from factoring in the value of the land a house sits on when determining coverage limits. Moreover, insurance companies would be required to offer policies covering only the unpaid principal on a mortgage. This approach seeks to meet mortgage company requirements while potentially reducing insurance premium costs for homeowners, as premiums are typically based on the full coverage and replacement value of the home.

Advertisements

The proposed policy, focusing solely on the unpaid mortgage principal, necessitates clear notification to policyholders that they are opting for coverage equivalent to the outstanding principal balance on their mortgage loan. It’s important to note that this type of policy would not encompass coverage for the contents of the home.

Proponents argue that if a home is valued at $400,000, but only $200,000 of unpaid mortgage principal remains, a mortgage-only insurance policy would reflect this difference. However, critics express concerns about potential drawbacks, such as increased claims litigation if homeowners with mortgage-only policies face catastrophic losses and struggle to finance repairs. There is also uncertainty about whether condominium associations would approve such coverage, as it may not fully cover the cost of unit repairs.

The bill has been assigned to the House Insurance and Banking Subcommittee of the Commerce Committee within the state legislature. While Florida takes proactive measures, it’s worth noting that other states, such as California, are also contemplating changes to homeowner’s insurance rules. In September, California’s top insurance regulator announced plans for new rules to encourage insurers to remain in the state, responding to the departure of major insurers citing increased wildfire risks and rising construction costs.

Advertisements

You may also like

blank

Bedgut is a comprehensive insurance portal. The main columns include commercial insurance, auto insurance, health insurance, home insurance, travel insurance, other insurance, insurance knowledge, insurance news, etc.

[Contact us: [email protected]]

© 2023 Copyright  bedgut.com