Find out what you need to know about insuring your home in Florida.
While home insurance laws tend to be standard across state lines, states like Florida have begun to enact changes to insurance laws in order to compensate for economic problems and disaster potential. Starting in 2009, lawmakers began changing home insurance laws in Florida, giving insurance companies the ability to raise rates to cover losses from hurricanes and from a weakening economy. These rate increases have been highly controversial, but insurance companies claim that they are necessary for them to have a backup in case of another catastrophe striking Florida. The Florida homeowner insurance laws thus make home ownership just a little more costly in the Sunshine State.
Florida Insurance Crisis
Prior to 2009, Florida home insurance laws were regulated to keep premiums fixed and make insurance costs manageable for homeowners. Beginning in 2001, the number of insurance companies in Florida started to drop as insurers left the state due to high risk. The storms that struck Florida between 2004 and 2006 left remaining insurance companies with more than 30 billion dollars worth of claims. As a result, insurance companies besieged the Florida Office of Insurance Regulation with requests to raise rates, which were then fixed to protect homeowners. Lawmakers in Florida began drafting legislation that would deregulate portions of the insurance industry and allow insurance companies to raise rates to protect their losses.
New Legislation
The 2009 legislation allowed insurance companies in Florida to raise rates as high as 10 percent each year. For the insurance companies, this is an essential to stay in business. Unlike insurance companies in some states, insurance companies in Florida have to calculate the risk of a major disaster such as a hurricane, which could leave them paying hundreds of millions of dollars in claims. In 2010, Florida lawmakers continue to discuss further increases in home insurance premiums. The insurance companies claim that prior legislation did not allow them to cover their losses in case of disaster and that the rate increase will make it possible for insurance companies to remain in business in Florida.
Fraud Reduction
Although the 2009/2010 legislation is most noteworthy for the rate increases, the bill has wider goals to reduce fraud within the insurance industry. Prior to 2009, Florida home insurance law allowed homeowners to request full payment for replacement damages, but did not require that the homeowner actually complete the claimed damage. In other words, a homeowner could file a claim for $4,000 worth of damage in a home, but then take the money and fail to make the repairs. This type of insurance fraud raises rates artificially for other homeowners, and the 2009 legislation allows insurance companies to monitor repairs more carefully. Additionally, the 2009 legislation changes the types of insurance discounts that homeowners can receive for protection against hurricanes. While the discounts are valid, the reality of the protection in homes often is not, and the law aims to prevent homeowners from taking advantage of discounts when they are not truly eligible for them.
Tags: insurance companies, home insurance, insurance laws, raise rates, 2009 legislation, companies Florida, home insurance laws
