SB 1714 Allows Citizens to Raise Home Insurance Rates 25%

Boca Raton Insurance Premiums

Boca Raton homeowners could see their Citizens premiums increased up to 25% a year as a result of the Florida Senate Banking and Insurance Committee approval of SB 1714. The bill allows Citizens to raise residential home insurance rates up to 25% a year in an attempt to get Citizens back to the insurance company of last resort not first choice. Many legislators claim that the rate increase is needed to make Citizens solvent. If a 1-100 year storm hit Florida, Citizens would have a $13.7 billion deficit. Since many insurance companies left the state in 2004 and 2005 because of the busy hurricane seasons, Citizen’s saw an increase in the number of policies from 820,000 in 2003 to 1.3 million in 2010. Legislators believe that the State of Florida should not be in the business of insuring homes or businesses, and that Citizens should not be competing with private insurers.

Other changes in the bill include restrictions to sinkhole coverage to the primary residence and not ancillary buildings. It is unclear how much premiums on sinkhole polices would increase. According to insurers, there was an increase in sinkhole claims and a drop in the number of policies in 2009. As an example, Citizens collected $8.3 million for sinkhole coverage from policyholders in Pasco and paid $24.9 million out to policyholders for claims. They also collected $5.9 million from Hernando policyholders, but paid out $40.5 million. In order for the company to keep up with payouts, it estimates that the average premium for Pasco policyholders would need to be $2,800 a year and the average premium for Hernando policyholders would have to be $5,300 a year. While Citizens is not proposing such rates, there are merely using these calculations to emphasize the huge differences in how much money in premiums they are taking in compared to how much more is going out paying claims. Insurers claim that fraud and abuse in sink hole claims is keeping costs high, and they are attempting to eliminate it to help make premiums affordable.  

Senator Alan Hays also plans to add language to the bill prohibiting Citizens from selling insurance for new homes or existing homes in high risk coastal areas or environmentally sensitive areas.  The bill is supported by the Florida Insurance Council, the 1000 Friends of Florida and Governor Rick Scott. Opponents claim that it will be too costly and difficult for new homeowners to obtain insurance and homes won’t be sold.

If you are purchasing a Boca Raton home, your Boca Raton Realtor can recommend an insurance broker to you to find the best rates and policy for your new home.