Florida Has a New Property Insurance Law – Will it Benefit Homeowners?

09 Feb

The Florida homeowners insurance market has been in trouble for years now and the recent hurricane season that resulted in Hurricane Ian hitting the west coast of Florida and Hurricane Nicole hitting the east coast weeks later certainly hasn’t helped. Insurers that have been struggling for years had a hard time covering all the claims that came out of these storms, leaving them financially weaker.

On January 1, Florida put in place some new laws that were designed to prop up the homeowners insurance market. Let’s have a quick look at the changes and how they may or may not actually help homeowners in the Sunshine State.

Why is Florida Homeowners Insurance Market in Crisis?

There are a number of reasons that insurers are struggling in Florida, but fraud is the largest, and by far most expensive. 

Insurance fraud is a major issue in Florida. Less than honest roofing companies offer free roof inspections which always turn up a problem. Homeowners are asked to sign an Assignment of Benefits form which allows the roofing company to file a claim on the homeowners policy.

Typically, the claim is denied or determined to be much less severe than the dishonest roofer claims. The roofing company partners with a shifty lawyer who sues the insurance company. It is usually more cost effective to settle than go to court and Florida also has a “one-way attorney fee” system, which means that the insurer must pay the legal fees of a plaintiff.

This kind of fraud happens daily in Florida. According to recent statistics, Florida makes up roughly 8% of all national homeowners claims nationwide but is responsible for roughly 80% of the national total of insurance related lawsuits. 

All of this fraud has forced many insurers to raise their rates, not offer coverage in certain areas or pull out of the state altogether. It has also resulted in many insurers going under. 

What the New Law Changes

Legislators in Florida have been trying to fix the insurance market for years but have continued to fail to bring costs under control. Their most recent effort resulted in Bill SB 2-A, which is aimed at protecting both insurance companies as well as homeowners.

Here are a few things the new law provides:

  • A $1 billion reinsurance fund to protect insurers in case of a major catastrophe, providing a safety net to new and returning insurance carriers. This is designed to bring insurers back to the state. 
  • Brings an end to assignment of benefits (AOB) which should help reduce the number of lawsuits. 
  • Require insurance companies to respond to claims faster. They now have 30 days, which is down from 45 days. Homeowners will now have one year to file a claim which is down from two years. 
  • Insurers are now required to pay out claims within 60 days which is down from 90 days.
  • Requires homeowners that have a policy with Citizens (the insurer of last resort) to carry flood insurance.
  • Gets rid of the “one-way attorney fees” system. Defendants will no longer have to pay attorney fees to the plaintiff.

Will This Law Help Consumers?

There is certainly no way to tell if the changes will solve the issues in Florida which have been ongoing for years. It should help homeowners as it reduces the time, they have to wait for their claim to be processed and paid out.

However, it is unknown if the changes will help reduce the number of lawsuits insurers face. Hopefully, removing the AOB option will help prevent homeowners from getting involved in an insurance lawsuit filed by their contractors. In addition, lawyers may be less willing to take these cases if they are no longer guaranteed their fees will be paid by the insurance company.

It will take some time, years probably, before it can be determined if these changes will make insurance more affordable in Florida. In the meantime, homeowners should be prepared for higher premiums in the future.  

For help with home insurance coverage, please call us at 1-888-685-4704 to review the best Florida home insurance rates and coverages, we shop over 30 different companies to provide the best policy and price for your home.

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