CAPE CORAL, Fla. — The insurance crisis in Florida is putting more on the minds of homeowners as they will now face another insurance premium increase.
The Florida Insurance Guaranty Association has issued an emergency assessment fee of 1%, which is falling back on some homeowners to pay starting October 1.
“It’s unfortunate because it’s going to cost everyone money, however, we live in Florida,” said Allen Glenn, who is currently battling his insurance company over paying for his roof. “Our deductible is $13,000.”
His company has only offered $10,000, while the damages exceed $100,000. At this point, he hasn’t seen his insurance rate go up since he’s only had his home for a year, but is bracing for it.
“No, it’s going to double, easily,” Glenn said.
Potentially double, even without seeing the new fee. It was requested by FIGA and approved by Florida’s Office of Insurance Regulation.
FIGA says in a letter it needs to cover claims from companies that are on the verge of becoming insolvent or already have, such as United Property and Casualty Insurance.
While costly for homeowners, Dr. Shelton Weeks, a real estate professor at Florida Gulf Coast University says it’s the best option.
“It is far preferable to the situation where we have market failure and there’s no availability of insurance,” he explained. “Yes, this is a bad thing. Especially if you’re looking at it from a standpoint of a budget as a household.”
Dr. Weeks says putting the bill back on the homeowners is one of the only things that can really be done.
“This is the mechanism to keep the system functioning, otherwise we would deplete the reserves,” he said. “When you have an extreme event like this with catastrophic losses, this is our current mechanism to dealing with that, to avoid market failure.”
How did we get into this situation? Weeks says it’s multi-faceted.
“A lot of systematic problems in the system. A lot of abuse and some bad behavior by a few of the actors have led us down this path,” he explained. “False claims, the assignment of benefits where you may end up in situations with claims being greatly exaggerated.”
Glenn says the situation we’re currently in could continue to be an issue, in his eyes.
“The problem that we’re going to continuously have is that more insurance are more likely going to be puling out of Florida, so what else are we left to do?,” he said.
The fee will last until September 2024, and it could continue through then if moeny for the claims FIGA is borrowing in bonds is not paid in full by then.