Based on the legislation that Governor Crist signed, the answer is “it depends”.  The homeowner insurance situation here in Florida is very complex, and the legislation that is going into effect is as complex.  Savings will depend on the following factors:

1.  Who the homeowner insurance is currently with and where the property is located.  Coastal properties who have seen their rates rise the most, will most likely see some relief, although it remains to be seen just how much.  I do not think that majority of people are going to be seeing a 40% reduction. 

2.  If you reside inland and your property is not insured through Citizen’s Insurance, your rate may only drop by 7% (if at all).

On the other hand, I can foresee the situation where homeowner insurance rates are going to increase uniformly around the state for those who have private insurance (not Citizen’s) due to the fact that all Florida property owners are on the hook to pay for any deficits in Citizen’s.  If we have another bad hurricane season, then we’ll wind up getting more assessments to pay for it.  Assessments were already included in last year’s homeowner insurance premiums under private insurers and will be in the coming year as well.  Even our auto insurance contains an additional 1% assessment this year for the Florida Hurricane Catastrophe Fund. 

 

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The Florida legislature spent the better part of the weekend discussing (fighting) over changes to property insurance in the state.  The bill will be voted on later today and will need the approval of Governor Crist, who has stated he won’t sign any bill unless it provides substantial savings.  Here is an outline of some of the proposed changes:

Double the coverage provided insurance companies under the Florida Hurricane Catastrophe Fund. 

This will subject all property owners in the state of Florida to massive risk ($70 billion) if the fund is wiped out in multiple years. 

Repeal the Citizen Insurance previously approved rate hikes and freeze any increases for 1 year. 

This will affect a decrease only to those property owners who are currently covered by Citizens. 

Removed the requirement that Citizen’s charge more than the private market. 

In essence, the State of Florida is getting into the insurance business. 

All businesses in Florida unable to find commercial hurricane insurance are eligible for coverage through Citizens Property Insurance. Citizens is allowed to set minimum mitigation requirements for coverage.

So now all Florida property owners are subsidizing the hurricane insurance for any businesses in the State.  

Homeowners can buy a policy without hurricane coverage, if they provide proof that their mortgage lender agrees.

I cannot see any mortage lender allowing a homeowner to “opt out” of hurricane coverage. 

Beginning in 2008, companies that sell home insurance in other states must also offer it in Florida if they wish to do other business here.

I believe this will have the opposite of the intended effect.  Insurance companies will pull out of the state.

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The Sun Sentinel writes that hope for Florida’s insurance woes lies in man named Ron Reagan. Looking like the government is going to be getting into the insurance business.

“I’m a conservative Republican and I believe in free enterprise and capitalism, just like President Reagan did,” Reagan said. “But [insurance costs] have gotten so out of control that we elected officials, regardless of our ideology, have to give rate relief, even if, sadly, that means more government involvement.”blockquote>

Measures discussed yesterday include making the state backed insurance company Citizen’s Property Insurance compete with private insurers.

Legislators clash, irate homeowners protest on opening day of session on insurance. The Florida House and Senate are in disagreement over how much risk the Florida taxpayers will incur.

Causing the early discord was a Senate plan that would place a $20 billion ceiling on what private insurance companies would have to pay policy holders to reimburse storm losses. Remaining claims would fall to Florida taxpayers, and would be paid for through a tax hike, cuts in the state budget, or a special fund.

Basically, the insurance companies will have their losses limited in exchange for lower rates. The taxpayers will bear the brunt of any catastrophic storms.

Legislature debates taxpayer risk. Are the citizens of Florida listening to these debates? If you live in the State of Florida, under these proposed bills you will be paying for catastrophic storm damage in the state, whether you personally experience it or not. Think people are screaming now? Wait until the taxes start to rise to cover this fund. But then again, most people are looking simply for rates to go down now, and could care less what might happen in the next few years.

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