On December 14, 2022, Florida Governor Ron DeSantis signed a property insurance form bill SB 2A to stabilize the property insurance market. Although it’s been some time, and the bill is designed to affect property insurance, property owners are still concerned. What do these new laws mean, and will Florida’s insurance changes affect property values?
What Does Bill SB 2A Change?
Firstly, the new law creates the Florida Optional Reinsurance Assistance Program (FORA). This provides a safety net of 5 billion dollars to bail out insurance companies after a major event such as a hurricane. However, many Floridians are in the Citizens Property Insurance Program, and SB 2A aims to incentivize policyholders to switch to private policies. The new law requires owners to buy flood insurance which would require them to move to a private policy as the Citizens Property Insurance Program does not cover flooding. However, they would only be required to move to private insurance if said policies are no more than 20 percent above the cost of a Citizen’s Policy.
SB 2A also makes it more difficult to bring fraudulent and frivolous litigation against insurance companies. Mainly, carriers are allowed to have mandatory binding arbitration in their insurance policies, which essentially means that policyholders are not allowed to take the carrier to court. Instead, they must take their claim to an arbitrator. Additionally, policyholders now must submit property damage claims within a year instead of two years, and insurers only have 45 days to conduct an on-site inspection.
How Does This Affect Insurance Companies and Property Owners?
What does this all mean for carriers and policyholders? These laws tempt insurance carriers to stay in the state. This will ideally help stabilize insurance rates and make it harder for insurers to drag their feet, so they have to conduct timely inspections. Overall, this should speed up the claims process on both the insurer’s and the policyholder’s end.
However, while mandatory arbitration policies do make it harder to bring up fraudulent claims, insurance policies don’t have to tell you outright that they abide by this policy. This means that if you don’t thoroughly review what you’re signing, you may save more with a particular policy, but you won’t be able to take them to court. This may also force property owners to get a private policy, even though they may not be able to afford it. One thing about Florida is that it’s going to flood, and if you don’t have the insurance to cover it, you’re up the creek without a paddle.
Will This Change Affect Property Values?
Ultimately, nothing in Florida’s insurance changes suggests it will affect property values. However, this doesn’t mean the effects of implementation won’t affect values, and everything is still up in the air. If things go well, and the law stabilizes the insurance market as it should, then more property owners can afford to protect their property. The easier it becomes to own a home, the more people will want and be able to own one. However, depending on your area’s housing supply, things can turn from a buyer’s to a seller’s market and will affect property values differently.
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