Fla. Senate Property Insurance Package Passes
TALLAHASSEE (CBS4) -- A wide ranging property insurance bill that re-enacts major portions of a bill vetoed by a former governor last year passed the Senate on Thursday over objections from lawmakers in areas that have seen lots of sinkhole claims.
Following sometimes spirited debate, the Senate passed SB 408, which makes a number of insurance industry-backed changes that the bill sponsor says will help reduce cost drivers that have had the industry clamoring for higher rates. It will also help make sure the companies have the money they need to meet their obligations.
"The most expensive policy you can get is a policy with a company that can't pay your claims," said Sen. Garrett Richter, R-Naples. "That's the most expensive policy. We need a solvent industry. This bill is an attempt to strengthen the market."
The measure's most controversial provision would allow insurers to drop comprehensive sinkhole coverage as part of multi-peril insurance coverage. Insurers have complained that sinkhole claims have skyrocketed in recent years, blaming the increase in large part on aggressive public adjusters and homeowners who cash in on questionable sinkhole claims, which are difficult to disprove.
Lawmakers from the regions where homeowners have filed most of those claims argued unsuccessfully for stripping the sinkhole changes from the bill, saying constituents may have a hard time satisfying mortgage requirements, or be forced into Citizens Property Insurance Corp. the state-backed insurer of last resort.
"You have people who won't be able to buy homes," said Sen. Mike Fasano, R-New Port Richey.
Backers of the change say the entire state faces a possible financial calamity should a major disaster outpace the ability of insurers to pay claims - which is likely because of a push over the last half decade or so to keep premiums low for consumers.
Taking up many of the same issues included in 2010's SB 2044, which was vetoed by Gov. Charlie Crist, this year's property insurance bill also makes a number of changes to combat fraud, bolster the financial viability of companies and try to make sure claims pay for actual damage. The plan also places more restrictions and requirement on public adjusters.
Among the major provisions is one that would allow insurance companies to make payments for structural repairs on a periodic basis as repairs are completed and receipts are produced. Current law requires insurers to pay replacement costs up front regardless of whether repairs are made.
Policyholders would have the option to insure the contents of their home for replacement value in a lump sum payment but would have to pay higher premiums for the convenience. Property owners could lower their premium costs by opting to insure their belongings on a pay as you go basis, receiving claims payments as items were replaced.
The bill would require Citizens to offer sinkhole coverage but that would be limited to the primary structure and all claims payments must be used to repair the home. Private insurers would be allowed to drop sinkhole coverage and place it with policies that insure a home only if it is destroyed in a sinkhole. Insurers could continue to offer comprehensive sinkhole coverage, but be able to charge rates largely unregulated by the Office of Insurance Regulation.
"One thing I have faith in is the free market," said Sen. Mike Bennett, R-Bradenton. "You show an insurance carrier how they can make money and they will come."
The bill now travels to the House, where a measure (HB 803) more similar to Richter's original bill is awaiting action on the floor.
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