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Flood Insurance in Florida Changing Due to New State Senate Bill

Florida homeowners may soon gain more options for flood insurance, more than what’s offered by the current federally subsidized national program, due to a measure that’s designed to help encourage more private companies to enter the market.

Earlier this month, the Florida Senate passed the bill, which would provide Florida residents with the flood insurance alternatives they’ve probably wanted.

While many Florida residents do need some type of flood insurance, especially if they live in flood-prone parts of the state, the lack of options on the market make it difficult for Florida residents to get true coverage. Most residents have to get it through the federally subsidized program. For a long time, that particular program was the only way that people could get some kind of flood insurance for a FL home.

With this bill passed, Florida residents can now look forward to having more options on the market than just the aforementioned program.


Major reforms on Florida flood insurance 

Despite the new measure passing in Florida, the federally subsidized program that allowed people to register for flood insurance did undergo some recent changes, particularly in light of the major insurance reforms that have taken place over the past year. Due to the reforms, it causes policies available through the federal program to rise in price. The once affordable insurance premiums increased higher, some of which were too high for homeowners to continue paying. Those prices especially rose in areas that are more flood-prone and even for older homes.

Since those changes happened, Congress later enacted a ‘stop-gap measure’ that helped delay some of the more expensive changes that occurred due to those reforms, also known as the Bigger-Waters Flood Insurance Reform Act. Despite the quick enactment, that doesn’t exactly repeal the changes; the increases are expected to be gradually phased over the next few years.


A potential to save money on flood insurance in Florida

While Florida homeowners potentially faced a big increase in their flood insurance premium, the newly passed measure is poised to potentially help Florida homeowners save money. The plan is expected to help homeowners potentially save money through encouraging them to purchase less insurance than what’s currently allowed under the federal program. This will essentially allow them to ensure their property against just the outstanding value of their current mortgage, the actual cash value of their property or even against the property’s replacement cost. The current federal program currently imposes limits of $250,000 for homes and $100,000 for personal properties at this time.

The new bill will also allow insurance companies to provide their customers various deductible amounts, which will subsequently give homeowners more options for insurance coverage. These coverage options include living expenses, contents coverage, coverage for secondary structures and more. Before any of these plan can take hold, they have to eventually be approved by the Office of Insurance Regulation.


Empathizing consumer choice for flood insurance

The new bill for Florida flood insurance is expected to provide consumers more choice than previous options had provided them. According to an industry professional, the bill will promote consumer choice, allowing consumers to control their own destiny in the now critical market. That same professional then commented that the new legislation will make Florida into a national leader in the flood insurance marketplace.

When observing the market, Florida is already home to several private flood insurance companies, though it’s just a handful of companies at this time. Some insurance companies who exclusively deal with homeowners insurance, such as Tampa’s Homeowners Choice Property And Casualty Insurance Company Inc., started offering coverage as a part of their homeowners insurance policies.

It’s the National Flood Insurance Program, however, who writes the most policies in Florida today. Over 37 percent of the flood insurance policies they write originate in Florida, which surprisingly enough makes the state a ‘net loser’ in the federal program. Only $3.7 billion in insurance coverage has been paid to residents of Florida.


Recovering from previous flood insurance increases

Despite the prospect of having choices on the Florida flood insurance market, many households are still recovering from the increases that occurred over the past year. It was said that about 268 homeowners in Florida were subject to the increases, particularly out of the 2 million federally based flood policies written on a yearly basis.

Under that aforementioned revised act, about 50,000 homeowners within the state of Florida with first or second homes will see their home insurance increase about 25 percent this year. That increase will occur until they see policies appropriate to covering any potential risks of flooding in their area. That doesn’t mean that insured homes will end up keeping their policies. It’s expected that about 100,000 homes will end up losing their insurance subsidies if sold. Florida homeowners shouldn’t feel too pressured or too insecure about their flood insurance policies, despite the news of increases and a ‘new face’ of the market.

Even though decided change is occurring now, there’s still plenty of options for Florida homeowners who need flood insurance. Without taking the recent news into account, over 100 nationwide private insurance companies currently offer federal flood insurance. The new measures, however, will actually help Florida homeowners save more money, since they don’t have to worry about paying premiums for flood insurance that’s affected by federally enacted changes. Florida homeowners should keep an eye on the market, especially if they need a policy, over the next year to see the changes eventually roll out.

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