Fla. Legislature Approves Refunds, Slates Special January Sessions
Florida’s storm-ravaged hurricane victims made top-of-the page headlines in newspapers and were interviewed “Live at Five” on television news broadcasts during mid-December as the Florida Legislature met in special sessions in Tallahassee to debate how to reimburse homeowners for multiple deductibles. Legislators even took the unheard of action of scheduling a second special session this month to discuss five major changes in insurance provisions.
Legislators approved relief for the more than 30,000 people hit with more than one hurricane insurance deductible, with $150 million coming from the state-run Hurricane Catastrophe (Cat) Fund. The bill reimburses up to $10,000 for policyholders paying a second deductible, and homeowners who paid three or four deductibles will receive up to $20,000.
In addition, the bill establishes a program under which homeowners would pay only one hurricane deductible.
If homes are damaged by more than one hurricane, homeowners would be responsible only for the lower deductible. For most consumers, hurricane deductibles are two percent of the home’s insured value, while deductibles for other losses are typically $500.
Legislators also approved relief for owners of mobile homes, who will receive a sales tax rebate of up to $1,500 when they buy a replacement mobile home.
At the same time the Senate and House unanimously approved a half-billion-dollar aid package, including property and sales tax rebates to reimburse residents who had to pay more than one hurricane deductible, offering homeowners up to $1,500 in property tax rebates if they had to pay taxes on a home they couldn’t live in after it was destroyed by hurricanes.
State law allows insurance companies to sell policies that include an out-of-pocket deductible to be paid on damage from each named storm in the same season. The new measure would change the law so that policyholders will pay only one deductible in each future hurricane season.
Cat Fund changes considered
Starting in 2006, up to $150 million will be borrowed from the Cat Fund, requiring an increase in auto and homeowner’s policies over the next five years. The increased assessment will be levied on all insurance lines, except medical malpractice and work-ers’ compensation through property and casualty carriers, and will affect auto and commercial insurance. The measure could increase the cost of automobile and residential insurance by about one-half percent.
During the special sessions in January, legislators will consider changing the Cat Fund to permit insurers to tap it sooner; letting policyholders choose their hurricane deductible; examining how companies set rates; reining in the growth of the state-backed Citizens Property Insurance Corporation; and encouraging more private companies to write policies in Florida.
Legislators said the goal of the meetings will be to make sure that the four hurricanes that hit Florida this year won’t drive up insurance rates and hit homeowners in the wallet as happened after Hurricane Andrew.
“There is likely going to be upward pressure on insurance rates in the coming year,” Senate President Tom Lee told the Fort Lauderdale Sun-Sentinel. “This next couple of months is going to be all about trying to figure out how to keep that down to a bare minimum.”
Rules in place
The new law requires the Department of Financial Services (DFS) to promulgate rules governing who is eligibile for rebates and how DFS will monitor the application process.
Pending the governor’s approval of the new law, the department will be assessing available data on policyholders with multiple deductibles and working with insurance companies to ensure all eligible Floridians are identified.
“Our goal is to get financial assistance to impacted Floridians as soon as possible,” Tom Gallagher, Florida’s Chief Financial Officer who oversees the Department of Financial Services explained. “Applications from insurance companies to eligible Floridians should be in the mail in early January.”
As part of the application, storm victims will need to provide proof from their insurance companies that they paid a second or third deductible.
After applications are completed, Floridians will forward them to DFS for approval. Submission instructions will be included in the application packet storm victims receive.
On Dec. 27, 2004, DFS had its rules in place on how the money will be distributed. The application deadline is March 1, 2005.