What's the 'Consumer Choice' Bill Going to Do to Your Florida Homeowners Insurance?

What's the 'Consumer Choice' Bill Going to Do to Your Florida Homeowners Insurance?

Now, I know that Florida homeowners insurance companies are feeling the sting of the sharp drop in homeowners insurance rates since H.B. 1A was passed into law in 2007, but does that mean we should give them absolute autonomy? Do we really want insurance companies to be given permission to raise their rates above and beyond the caps set on insurers by the state? On the other hand, what's going to happen if the companies currently pushing for the passage of the 'Consumer Choice' bill don't get what they want?

The Pros to Consumer's Choice

According to the Florida State Insurance Commissioner, 102 out of 201 homeowners insurance companies are steadily losing money each month following mandated rate drops. If these companies continue to lose money they may choose to pull out of Florida entirely, leaving tens of thousands of homeowners uninsured. With the threat of major storms hanging over their head, threatening to drop at any time, that's not something Florida homeowners want to hear!

Consumer's Choice is designed to allow companies who carry a certain amount of capital to bypass state insurance rate regulations to establish higher rates for high risk properties, giving consumers a wider array of choices when it comes to their coverage.

The Cons of Deciding to Just Say Yes

Is the Consumer's Choice bill really what's best for Florida homeowners?

Every cloud may have a silver lining, but just ask Governor Charlie Crist what he thinks of Consumer's Choice. Crist vetoed a similar legislation last June, claiming that allowing companies to bypass state legislation regarding insurance caps would throw the door wide open to unpredictable and ungoverned rate increases on their Florida homeowners insurance. He also accused the bill of being biased on the part of major insurance carriers, drawing hundreds of thousands of policies away from Florida domestic companies.

“Largely because of this new capital [from new Florida domestics], more than 400,000 policies were taken out of the state-run Citizens Property Insurance Corporation in 2008, reducing its exposure by more than 20 percent,” says Florida Insurance Commission Kevin McCarty.

Consumer groups, including the Consumer Federation of America, the Center for Economic Justice, United Policyholders and Consumer Watchdog, vehemently protested the bill last spring.

“Normally, if a seller of a product asks too much for it, the consumer can walk away,” they wrote. “But home insurance is not like that. Lenders require maintenance of hazard insurance as a condition of keeping the mortgage effective.”

Consumers retain the right to refuse to do business with Consumer's Choice participants, but the door to the Consumer's Choice program is wide open to any company that wants to take part. So what's going to happen to your Florida homeowners insurance rates if this bill goes through?

Only time will tell.

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