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Florida Insurance Law Blog

Florida Senate Legislation Encourages Private Market Flood Insurance

The Florida Senate recently passed a bill that would encourage private insurers to offer flood insurance, possibly providing thousands of homeowners with relief from the federal government's National Flood Insurance Program premiums. The bill's sponsor, Sen. Jeff Brandes, R- St. Petersburg, said "It is time for Floridians to control our own destiny and lead the nation with a free-market flood insurance program," as quoted in the Palm Beach Post.

This bill emerged just after the federal government passed a bill to scale back many of the flood insurance premium increases it established through a 2012 provision that based the new flood insurance rates on re-drawn flood maps. Florida property owners with homes on or near the coast were hit the hardest by 2012 premium increases. But with the repeal comes a sense of relief for those who would have been forced to pay obscene amounts of money for flood insurance under the 2012 provision.

The National Flood Insurance Program was created by the federal government in 1968 after it "became clear that private insurance companies could not profitably provide such coverage at an affordable price," according to a history of the program by the Federal Emergency Management Agency. Hurricane Katrina and Superstorm Sandy caused the NFIP to incur a $24 billion deficit, which prompted, in part, the 2012 provision calling for the steep increases.

Senate President Don Gaetz, R-Niceville said the legislation aims to pave the way "for a private market for flood insurance in Florida, freeing homeowners from the dictates, irregularity and uncertainty of Washington bureaucrats."

Though Congress pulled back the flood insurance premium increases for the most part, Florida legislators want to press ahead with legislation that encourages private policies.

"Under this legislation, Floridians will have a wide range of flexible options to choose from so they can reach an affordable level of coverage for their property," Gaetz said.

What does this bill seek to accomplish?

The Florida Senate bill, SB 542, is meant to provide more flexibility to policyholders and private insurers to select various deductible amounts. It would allow them to choose between:

  • Insuring their property for the outstanding balance of their mortgage,
  • the property's replacement cost,
  • or the actual cash value.

It also aims to allow those seeking flood insurance to choose to include or exclude coverage for contents, additional living expenses, or secondary structures.

A Florida House bill (HB 879) currently being reviewed by different committees prohibits private insurers from covering only the amount owed on a mortgage, for example, as some lawmakers said covering only a specific amount could lead to insufficient coverage and ruined communities following a disaster.

It's yet to be determined if private insurers will begin offering affordable coverage, but the Senate bill gives some hope that private flood insurance will soon be available. It's important to note that private insurers usually do not provide coverage for damage caused by flooding, which can result in large out-of-pocket expenses for homeowners. If you have any questions about your property damage and whether it is covered under your insurance policy, please contact us, Pekar Law P.A., at 813-712-8762.

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