Fla. lawmakers have forced Homeowners buy flood insurance

Hundreds of thousands of Florida homeowners face requirements to buy flood insurance under a proposed rule approved Wednesday by the state Legislature. This is the first manager of its kind in the country.

The requirement applies to properties in the state, even if they are in flood zones and will cost some homeowners thousands of dollars a year.

The bill was approved two months after Hurricane Ian devastated parts of Florida that almost never flooded (Climatewire, Oct. 1). Proponents say the requirement can protect people whose homes have been damaged by storms from financial damage due to flooding that is often not covered by standard homeowner’s insurance.

“It might be a good idea to require people to buy flood insurance,” said Paul Handerhan, president of the Florida-based Federal Association for Insurance Reform, a consumer nonprofit. “This seems to be the only mechanism to encourage adoption.”

The demand comes as lawmakers and federal officials struggle to get more homeowners across the country to buy flood insurance and protect themselves financially from climate change.

Federal law requires people to have flood insurance on property in a flood zone if it is secured by a federal mortgage.

However, many people do not accept this requirement, and less than 4 percent of households nationwide have flood insurance through the National Flood Insurance Program, which is administered by FEMA and provides the majority of US flood alerts.

In Florida, the most flooded state, 19 percent of households have flood insurance. The second-highest rate in the US after Louisiana. Despite this, 7 million households in the state are not flooded.

The need for flood insurance in Florida was included in a major bill passed by the state Legislature during a special session this week to overhaul the state’s insurance sector.

Many local insurance companies have gone bankrupt this year or defaulted on property damage due to large losses. That’s what encouraged hundreds of thousands of Floridians to buy policies through the state’s last insurance company, Citizens Property Insurance Corp., as Florida became the most expensive state in the country for property, according to Insurance Information (ClimatewireJune 22).

The bill includes long-sought provisions by insurance companies to reduce losses, including one intended to discourage policyholders from filing lawsuits challenging offers they know to be incomplete.

“This is landmark legislation for Florida,” said Mark Friedlander, a spokesman for the Insurance Information Commission.

Friedlander said the bill would help the state’s insurance sector and homeowners.

“It might be a financial burden for some families, but at the same time, if you’re really damaged, how are you going to recover from hurricanes and floods if you don’t have insurance?” Friedlander said.

The bill passed the Republican-controlled Legislature largely along party lines and went to Gov. Ron DeSantis, a Republican who is expected to sign the measure. The flood insurance provision drew no objections or comments during three days of debate and voting.

The requirement applies only to property owners who have insurance through Citizens Property Insurance, which is the state’s largest insurance company. Citizens covered 1.2 million properties – nearly triple the number covered three years ago. All policy holders should purchase flood insurance even if they are in flood prone areas. The requirement will be phased in over the next four years, beginning in April with property owners in a flood zone.

Policyholders can avoid the requirement by canceling their policy and buying the property through a private insurance company. .

That’s part of what the Florida Legislature is hoping for, said Thomas Cotton, who owns the Hugh Cotton Insurance agency in Orlando.

Lawmakers want to encourage people to buy insurance through private parties to “reduce” Citizens and help rebuild the property-insurance sector in Florida.

“How do we attract capital to a market when a government-subsidized company is their competition?” Cotton said.

Another goal, Cotton said, is to avoid disputes between Citizens and its policyholders or property damage related to storms caused by severe storms or flooding. Homeowners and other insurers sometimes deny claims after a hurricane because they say the damage was caused by flooding, which is not covered under their insurance. insurance.

“The idea is to make a flood policy of the Citizen to stop the trial that will follow,” said Cotton.

It remains to be seen how many Citizens policy holders will purchase flood insurance and how many will opt out of the requirement. by switching to a private insurance company.

Friedlander said the insurance institute for homeowners who live outside flood zones should pay only a few hundred dollars for flood insurance, which would be cheaper than giving up their Citizens policy and buying from insurance from a private company.

“If you intentionally leave Citizens because you don’t want flood insurance, you’re going to pay more,” Friedlander said.

Handerhan said that as part of the insurance reform, he hopes that homeowners will buy insurance even if they live outside of the flood plain and feel they are not at risk.

“Anywhere you live in Florida you can be at risk of a flood,” Handerhan said. “People when left to their own choice whether to buy flood insurance usually don’t do it. It is difficult for them to understand the risk from a low-probability, high-severity event, assuming it will never happen to them. But it always happens.”

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