Florida’s property insurance rates are expected to rise in early 2010. The rate increases are intended to help protect Florida policyholders by giving adequate coverage to each insurance company should a major disaster occur.
Despite a lack of severe hurricanes or natural disaster damage in Florida this year, Florida is taking the proper steps to ensure taxpayers are not left with the burden of covering damage with taxpayer funds by utilizing this time to increase homeowner’s insurance rates. The extra funds from the increase will be used to not only help reduce the financial burden incurred by taxpayers in recent years, but to help prepare for future disasters.
Currently, insurance experts argue that the state funded Citizens Property Insurance has established an artificial rate for homeowner’s insurance, which does not properly protect its policyholders adequately should a major natural disaster occur. Should a major hurricane hit and Citizens not have enough to cover the situation, Florida taxpayers would be forced to make up the difference through insurance rate hikes across the board for homeowners – whether they belonged to Citizens insurance or not.
In response to the insurance industry’s concerns, the Florida legislature recently received a 5.4 percent increase for full coverage policies that will go into effect in February 2010. The increase, which was initially proposed as a ten percent increase, was almost unanimously agreed as needed in some form by lawmakers and insurance experts as a way to help support the fragile insurance company. Currently, actuaries report the fund as being around forty to fifty percent of where the company should be to properly insure all of its policyholders.
The rate changes will not be the only rate increase Florida has approved, however. In an effort to properly insure policyholder’s against natural disasters in future years, seven of the major property insurers in Florida have asked the Office of Insurance Regulation to grant an increase in their insurance rates. These companies are among the twenty-five largest insurers of homeowners insurance in Florida and initially asked for increases of seven to fifteen percent. The largest rate increase was requested by St. John’s Insurance Company, which insures around 198,000 policies. Other companies that have asked for increases include Universal Property and Casualty Insurance, Liberty Mutual Insurance Fire Company, United Property and Casualty Insurance, America Integrity Insurance, and Southern Fidelity Insurance.