Few see quick relief in property insurance crisis – InsuranceNewsNet


At the end of May, the Florida Legislature was convened in special session by the Governor to deal with the insurance crisis Floridawhich creates havoc for the owners.

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Every month, homeowners across the state are let down by insurance companies pulling out of the state altogether, or they see premiums skyrocket for the same coverage, or they can’t find coverage for the roof of their house, which was installed more than 15 years ago.

Owners are required to self-insure, which means they do not have private insurance and must be diligent about setting aside money to pay for storm damage, replace old roofs in good condition or obtain insurance through the Citizens Property Insurance Corporation. This private, quasi-public program is known as insurance of last resort.

The problem with the Citizens Property Insurance Program is that many legislators and experts argue that the program $3 billion on-reserve is insufficient for potential liabilities in the event of a major hurricane, which could leave homeowners or ratepayers helpless in the aftermath of a catastrophic storm.

The bill approved by the Florida Legislature and the governor addressed long-term issues that could, over time, help homeowners. Yet most agree that immediate relief is not imminent or certain. The bill attempts to reduce bad faith litigation by limiting the awarding of benefits, allowing different potential deductible options for older roofs and creating a reinsurance program to encourage businesses not to leave the state. .

Additionally, the legislation prevents insurance companies from arbitrarily requiring roof replacements and provides homeowners with the opportunity, through independent inspections, to prove that their roofs are in good condition. These measures, if not reversed by the courts in the long run, should help ease rates, but overall they provide marginal relief from the current crisis.

Claims for assignment of benefits have been a big part of the problem in the state. This is a process in which a roofer or contractor performs work for a homeowner for insurance repairs. Then the owner gives that contractor the right to collect the money owed to him by the insurance company.

Often these contractors would have an attorney bring a lawsuit against the insurance company to collect. In many cases, the insurance company would settle rather than fight the claim and be responsible for the contractor’s attorney fees.

Under this new law, the owner or the beneficiary of the insurance are the only parties who can sue an insurance company with the prospect of collecting attorneys’ fees, and they cannot assign their benefits. to another party.

By asking the actual insured to file the complaint, many believe it will stop those who commit insurance fraud. This bill includes rules regarding the time limit for notifying and filing claims, setting fee amounts, and other prescriptive legal guidelines that should stem bad faith litigation.

The new bill also allows private insurance companies to have a separate roof deductible which can be 2% of the value of the house or 50% of the value of the roof. This deductible would not apply to hurricanes or tree damage, but something like a hailstorm would no longer mean a free roof at a low deductible.

As policies are updated, many homeowners will see a huge change in this area, especially if they have an older roof. The bill prohibits an insurance company from refusing to underwrite or renew a policy based on the age of the roof if the roof is less than 15 years old or if an inspection determines that the life of the roof is greater than five years.

The state sets up a $2 billion reinsurance program to encourage property insurance companies to stay in the state. It’s not a long-term program, and many fear the money will be used by businesses that don’t have the financial means to stay in business. Savings from the reinsurance program should be transferred directly to Florida owners, and some are skeptical given the nature of the program.

The bill does nothing of significance, that is, to end the abuse of the system by professional complainants. Many fear the bill will bail out fringe insurance companies and allow professional plaintiffs, with the help of aggressive lawyers, to do the same thing differently.

Additionally, a few commercial industries have already filed lawsuits against the bill and are challenging the constitutionality of the fee limits on the allocation of benefits. The bill also establishes a $150 million My Safe Florida Home Program grant program that can be used by Florida owners with properties valued at less than $500,000 to fortify their homes against hurricanes. The belief is that these improvements should help homeowners and reduce future insurance costs.

What could make things worse? A bad hurricane season in Florida could cause the Citizens Property Insurance Company face debts that he cannot pay.

Over time, the new legislation could help homeowners, but for now, little is likely to change.

Don Magruder is the CEO of Ro-Mac Lumber & Supply, Inc.and the host of the show “Around the House”, which can be seen on AroundtheHouse.TV.


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