With all the heavy rains and flooding occurring recently this past week in Southeast Florida, I thought it fitting to discuss flood insurance. A few days ago, the Florida Senate Banking and Insurance Committee passed a bill that looks to provide Floridians with an option of obtaining flood insurance from private insurers. The motivation for the bill seems to be to address hikes in flood insurance premiums expected under the National Flood Insurance Program (“NFIP”).
Senate Bill 542, which would lay the framework for the private marketplace, received unanimous support Wednesday in the Senate Committee on Banking and Insurance.
Senate Bill 542 creates a wide range of flexible options for policyholders to choose so they can reach an affordable level of coverage for their property. The hallmark of the proposal will allow policyholders the option of covering either the outstanding balance of their mortgage, the replacement cost of their property, or the actual cash value of their property.1 The thought is that consumers can have some options to select what they think is best suited for their needs in this flood insurance market.
There is of course no guarantee that private insurers will enter this market if they are even given that chance if the bill becomes law. This is also no guarantee that any private insurers interested in entering the flood insurance market in Florida would offer rates lower than what consumers currently have available through the NFIP. However the action this past week is the first step toward knowing those options and potentially having some other options available.
We will continue to track this bill and will provide updates as it progresses further.
1 "Legislation Is Fast Tracked To Encourage Private Flood Insurance In Florida," Miami Herald, Mary Ellen Klas, January 8, 2014.