At the end of May, the Florida Legislature was called to a special meeting by the Governor to solve the problem of property insurance in Florida, which is causing problems for homeowners.
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Every month, homeowners across the state are being dropped by insurance companies pulling out of the state, or seeing their premiums skyrocket, or can’t afford their roof, which was installed more than 15 years ago.
Homeowners are forced to self-insure, which means they don’t have private insurance and must work hard to put money aside to pay for hurricane damage, replace old roofs properly, or get insurance through Citizens Property Insurance Corporation. This private plan for the public is known as end-of-life insurance.
The problem with the Citizens Property Insurance Program is that many lawmakers and experts argue that the $3 billion in savings is not enough to cover potential losses in the event of a hurricane, which could leave homeowners or taxpayers helpless after a severe storm.
A bill passed by the Florida Legislature and the Governor discussed long-term measures that, in the long run, could help homeowners. However, many agree that early treatment is neither superior nor guaranteed. The bill attempts to crack down on bad faith lawsuits by limiting the distribution of benefits, allowing for a variety of ways to remove old roofs, and creating a recycling program to encourage companies to stay out of state.
In addition, these laws prevent insurance companies from needlessly replacing roofs and provide homeowners with the opportunity through independent inspections to ensure that their roofs are in good condition. These measures, if not resolved by the courts in the long term, should help to reduce prices, but overall, they provide little relief from the existing problems.
Assignment of Benefits claims have become a major problem in the government. This is the process by which a roofer or contractor works for the homeowner to arrange insurance. The homeowner then gives the contractor the right to collect the money owed to the insurance company.
Usually, these contracts have an attorney to file a lawsuit against the insurance company to collect. In most cases, the insurance company will settle the claim rather than fight the claim and will cover the contractor’s attorney’s fees.
Under the new law, the homeowner or insured beneficiary is the only person who can file a lawsuit against the insurance company in hopes of collecting attorneys’ fees, and cannot assign their benefits to another party.
By having the actual insured party filing the suit, many believe this will deter insurance fraud. Included in the bill are rules on the time frame for identifying and filing complaints, imposing fines, and other important guidelines aimed at preventing malicious prosecution.
The new bill also allows private insurance companies to have a separate deductible that can be 2% of the home value or 50% of the ceiling value. This deductible does not apply to hurricanes or tree damage, but something like snow may not mean a free roof at a lower deductible.
As policies change, many homeowners will see significant changes in this area, especially if they have an older roof. The bill prohibits an insurance company from refusing to write or renew a policy based on the age of the roof if the roof is less than 15 years old or an inspection confirms that the life of the roof is greater than five years.
The government is implementing a $2 billion recovery program to encourage property insurance companies to stay in the state. This is not a long-term program, and many are concerned that the money will be used by companies that do not have the cash to stay in business. Savings from the reinsurance program are supposed to be paid directly to Florida homeowners, and some question what will happen based on the nature of the program.
The bill does not do one important thing, which is stopping systematic abuse by professional plaintiffs. Many worry that the bill will push insurance companies out of business and allow claimants, with the help of aggressive lawyers, to do the same thing differently.
In addition, several businesses have already filed lawsuits against the bill and are challenging the legality of the fee for providing benefits. The bill also establishes a $150 million My Safe Florida Home Program that can be used by Florida homeowners with properties worth more than $500,000 to strengthen their homes against hurricanes. The belief is that these changes should help homeowners and lower future insurance rates.
How can it make things worse? Hurricane season in Florida could cause Citizens Property Insurance Company to face bad debt.
Over time the new laws may help landowners, but for now, little will change.
Don Magruder is CEO of Ro-Mac Lumber & Supply, Inc., and host of the “Around the House” Show, which can be viewed at AroundtheHouse.TV.