2023 was a pivotal year for Florida homeowners as rates increased and insurance became more difficult to secure. With an increase in the frequency and intensity of hurricanes across the state, numerous insurance and reinsurance companies have pulled out of the Florida market, bringing spiking insurance costs as high as $4,000 a year.
After public unrest and a general need for improvements in the market, new bills and legislation have slowly been proposed to address the current situation. Most recently, House Bill 809 and Senate Bill 1070 aim to require insurance only for the cost of the mortgage principal, rather than the entire property value. If passed, this would be a revolutionary introduction and potentially save Florida residents from the rising cost of insurance. However, some argue it may not be a beneficial solution.
How Will These Bills Work If Passed?
House Bill 809 and Senate Bill 1070 propose significant changes in homeowner's insurance regulations. These bills aim to prohibit insurance companies from including any land value in the coverage limit for a home, and instead, require a policy option that solely covers the outstanding mortgage principal. This would meet any loan insurance requirements while aiming to reduce premium costs.
One aspect that causes concern is that insureds would hold coverage equal to the unpaid mortgage balance, which excludes coverage for home content and external property. So, while premiums may be reduced, coverage will also be significantly reduced. There are also questions about how substantial reductions will be when taking into consideration liability and ordinance coverage. Most insurance policies require other coverages aside from the home itself, and these liabilities could limit the reduction possibility for premiums.
While the bill certainly poses some benefits, critics express concerns about potential repercussions if catastrophic losses from natural disasters under mortgage-only policies occur. With the cost of labor and materials at an all-time high, and the risk of environmental threats even higher, homeowners may not be able to recover from a loss. Yet, experts note that many states already allow for homes to be widely underinsured, even though carriers strongly recommend against this practice.
Is Florida the Only State Considering These Amendments?
Florida is not the only state experiencing a rise in claims and premiums. California has suffered severe wildfires and floods, and other states near the coast including Louisiana and Mississippi are at higher risk than average.
While no other state has introduced this specific bill, those in high-risk areas have introduced new legislation to keep insurance companies within their territory and maintain coverage for residents. As more states fight to find solutions to this ongoing problem, this bill could see versions of itself across the country if successful.
What is the Timeline for these Bills?
These bills are currently sitting with the Insurance and Banking Subcommittee, with an effective date noted as 7/1/2024. As with all bills and amendments, these proposed changes will go through a series of discussions and amendments before being finalized. The date could be pushed out depending on how many changes are required to the bill, but there has been no update since 12/27/2023.
Secure Homeowners Coverage for 2024
As risks and costs to rebuild are higher in frequency and severity, homeowners’ insurance is more important than ever before. ECBM Insurance works with homeowners to secure comprehensive coverage at a fair market price. Our privately owned, family-run business understands the needs of each client and can guarantee an insurance policy package that protects your home and assets. Whether you recently bought a new property or are looking to secure new coverage for your home in 2024, our agents are here to help. Contact us for more information.
