Florida’s new property insurance and condominium security laws may not provide relief to landlords
When Lynn Haven resident Tori Lambeth bought her first home in 2019, it was good. The payment – mortgage, taxes and insurance – was perfectly affordable. But every year since the purchase, the insurance costs have increased.
“We were paying $1,360 and now it’s $1,586 a month because of our home insurance and our flood insurance,” Lambeth told WFSU.
“I tried shopping around to see if I could get my property and flood insurance lowered, and the few companies that called me back, it was actually more than I was paying. We also discovered that we were underinsured,” she said.
Underinsured means Lambeth did not have enough insurance to cover a full replacement of the house if his were to be destroyed.
Lambeth said it needs to watch its spending closely as its mortgage and insurance costs continue to rise. The insurance industry attributes current market problems to fraud and lawsuits.
Gov. Ron DeSantis approved new laws that the state hopes will calm a chaotic property insurance market and eventually lead to rate cuts for homeowners. But some lawmakers and industry analysts worry that the packages won’t provide relief fast enough and won’t go far enough for homeowners to see a difference.
The property insurance crisis is so severe that DeSantis has ordered a special legislative session to address it.
Broward Democratic Rep. Robin Bartleman said she supports this extra legislative session because of an elderly Social Security voter who can no longer pay her homeowner’s premiums. And, for her friend – a single mother who was abandoned by her insurer.
“I can’t go home and say I didn’t do anything,” Bartleman said.
“I have to tell you this; it’s not a partisan issue. We all need to go home and watch our neighbors. We’re all in this together in the state of Florida.”
This is the third time in the past three years that state lawmakers have tried to contain the worsening state property insurance crisis, but rates continue to rise in double digits and more and more insurers are going bankrupt. Three have failed since February.
Senate bill sponsor Jim Boyd, R-Bradenton, says he hopes homeowners will soon feel some of the benefits. But he says many of the changes will take some time to have an effect.
“Unfortunately it’s going to take a little while, but we’re confident it will create this opportunity for owners to save money over the next two years,” he said.
Boyd says a few of the provisions could result in short-term rate reductions for homeowners. There is a new $2 billion reinsurance fund for hurricane damage that insurers can tap into more quickly. It obliges participating insurers to pass on their savings to consumers. Homeowners can also get $10,000 grants to protect their home from hurricane damage, and there’s a 2% deductible option for roof damage.
Insurers have indicated that fraud in roofing claims is a cost driver, and homeowners have to replace roofs by around 10 years, when the average life of a roof is around 20 to 25 years. , just to maintain their confidence.
Paul Handerhan of the Federal Association for Insurance Reform says he thinks lawmakers could have gone further to add measures that could have provided more immediate relief to consumers. He argues that lawmakers could have suspended a 25% surcharge that insurers must pay when accessing reinsurance from the Florida Hurricane Catastrophe Fund, which could have sent about $300 million to taxpayers. The fund also recently increased its rates by more than 12%.
“So in my mind when we talk about ‘Okay, let’s have a special session because we’re trying to stabilize the market and provide rate relief to consumers,'” he said. “Those are two things they could have had that would have provided immediate rate relief. The bill, although I think it’s good and like I said I appreciate it, those benefits will not materialize in the next 18 to 24 months.
The new law limits attorney fees – a change the insurance industry has been seeking for years. Michael Carlson, CEO of the Personal Insurance Federation of Florida, says excessive litigation leads to market instability.
“We believe that owners should be able to sue their insurance company if they have really been abused – if the insurance company has violated the terms of the insurance company,” he said. “Nothing in the bill will limit that. I think what is being said by some opponents of the bill and it being characterized as access to courts is really better access to attorney fees.
But Amy Boggs of the Florida Justice Association says she worries the new laws will make it harder for landlords to go to court for help. Part of the changes state that owners cannot file a bad faith claim unless the insurer breaches the contract.
“We feel the bill contains very little consumer protection,” she said. “It’s really more of a corporate bailout for those insurance companies that mismanaged their funds and mishandled litigation and stuff.”
The legislation won bipartisan support. But Democrats in both houses have introduced dozens of amendments, including rate freezes that they say would provide immediate relief to homeowners and renters facing a shortage of affordable housing in the state. They also attempted to address the impact of climate change on fares. But none of the amendments won the support of Republicans.
One area of complete agreement on both sides of the aisle was the provision that requires high-rise condominiums to be inspected regularly and funds set aside for repairs and maintenance. It comes in response to the collapse of the Surfside condo building last year, killing nearly 100 people. It was added late to the special session after negotiations between House and Senate leaders resulted in an agreement.
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