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Florida Legislators Pass New Insurance Legislation

(News Item #0045, Published: 01/24/07) To Be Reused

In a special session of the Florida Legislature under the leadership of Governor Charlie Crist, a 167-page bill was passed this week that should lower insurance premiums between 5% and 40% and provide other insurance relief to property owners in all areas of the state. This new legislation affects millions of Florida property owners in a positive way. A key element of the new legislation allows for non-homestead properties (vacation homes) to be eligible for coverage under Florida’s joint underwriting pool, which is Citizens Property Insurance Corporation, starting March 1, 2007.

"This legislation is far-reaching and will have a positive affect on our coastal real estate market," says Helen Spohrer, owner of Prudential Resort Realty. "It creates premium roll-backs, more coverage for vacation home owners and some relief for commercial property owners." Below please find a summary of the legislation provided by the Florida Association of Realtors.

Lower Rates: - Allow property owners to exclude windstorm coverage from their policies;

- Allow policyholders to exclude contents coverage;

- Remove the requirement that Citizens Property Insurance Corporation charge the highest premiums in the state;

- Repeal Citizens’ Jan. 1, 2007 rate increase and freeze rates at the Dec. 31, 2006 level.

- Eliminate the cap on deductibles so a homeowner can choose a deductible other than the standard 2 percent, 5 percent or 10 percent in current law. However, the policyholder must execute a written statement demonstrating understanding and intent, and must obtain approval by a mortgage or lien holder if the deductible is over 10 percent on a home valued under $500,000.

- Allow non-homestead properties to be eligible for Citizens coverage effective March 1, 2007;

- Authorize Citizens to write multi-peril policies in the windstorm pool, which will result in a direct decrease in premiums for at least 110,000 policy holders.

Protect Policyholders:

- Require all Florida-only insurance company subsidiaries to have a surplus of at least $50 million in liquid assets to help ensure that policyholders can receive payment when they need it;

- Require insurance companies to evaluate the hurricane-security of a structure rather than the date of construction when determining risk and establishing premiums. Age of the home may not be used as the sole reason for rejection of coverage;

- Require insurance companies to give at least 100 days written notice, or written notice by June 1, whichever is earlier, for any non-renewal, cancellation or termination of a homeowners policy that would be effective between June 1 and Nov. 30;

- Require insurance companies to expedite payment of claims following a storm. Insurance companies must pay or deny a property insurance claim within 90 days of notice of the claim with an exception for factors beyond the control of the insurer. Violation is subject to penalty under the Insurance Code, subjecting the insurance company to disciplinary actions against its license;

- Prohibit excess profits by property insurers.

Expand the Market:

- Require any insurance company that writes homeowners policies in other states and writes auto insurance in Florida to sell homeowners insurance in Florida effective Jan. 1, 2008;

- Allow Citizens to write statewide commercial insurance policies and to determine policy limits and premiums;

- Allow Citizens to sell traditional homeowners policies to 350,000 customers who currently buy only windstorm coverage from Citizens;

- Enable insurance companies to purchase additional backup insurance from the state’s Hurricane Catastrophe Fund at rates lower than on the private reinsurance market;

- Repeal a law that had called for insurers to pay extra into the fund to build up its reserves;

- Allow state regulators to waive a deposit requirement for foreign-based reinsurance companies. The idea is to lure more worldwide reinsurers to sell coverage to Florida companies, raising the possibility they'll be able to find additional cheaper reinsurance.

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