State Senate passes bill to give Florida flood insurance option

Homeowners could have more flood insurance options than the federally subsidized national program under a measure designed to encourage private insurance companies into the market. The Florida Senate unanimously passed the bill on Wednesday.

The bill, SB 542 by Sen. Jeff Brandes, R-St. Petersburg, creates an alternative to the federal National Flood Insurance Program by authorizing private companies to write the insurance that had previously only been available through the federally subsidized program.

The federal program has undergone major reforms in the last year that have sparked hefty premium increases for homeowners in flood-prone areas and with older homes, whose premiums had traditionally been subsidized. The outcry over the giant cost increases prompted Congress to enact a stop-gap measure that delays the most expensive changes to the Bigger-Waters Flood Insurance Reform Act, but does not repeal them. The increases will be phased in over time.

Under the Senate plan, homeowners could potentially save money by buying less insurance than is allowed under the federal program, such as insuring their property only for the outstanding value of their mortgage, the property’s replacement cost or the actual cash value of the property. The current limits under the federal program are $250,000 for a home and $100,000 for personal property.

The bill also authorizes insurance companies to offer various deductible amounts and to give homeowners more options for covering contents, living expenses, secondary structures, etc.

The insurance plans would have to be approved by the Office of Insurance Regulation.

“The bill emphasizes consumer choice and will let us control our own destiny in this critical market,” Brandes said in a statement. “This legislation makes Florida a national leader in the flood insurance marketplace and I am grateful to my colleagues for their overwhelming support.”

Only a handful of private companies are currently offering flood insurance in Florida. Tampa-based Homeowners Choice Property & Casualty Insurance Company Inc. began offering flood coverage as part of a homeowners insurance policy in January. The Flood Insurance Agency, based in Gainesville, also writes policies.

The NFIP writes more flood insurance policies in Florida than any other state — 37 percent — and the state is a net loser in the program. Of the $50 billion paid out over the history of the program, only about $3.7 billion has been paid to Floridians.

About 268,500 Florida homeowners in Florida were subject to hefty increases among the 2 million federal flood policies written anually. Pinellas County has more subsidized policies than any other in Florida: 50,255 out of 141,764 policies. Miami-Dade County is second with 47,442 out of 366,376 policies.

Under the revised Biggert Waters reforms, an estimated 50,000 homeowners in Florida with second homes will see 25 percent rate hikes per year until they got to a rate that reflected the real risk of flooding; 103,000 primary homes will lose their subsidies if their homes are sold.

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