Legislators take insurance bill to the wire

The Florida Legislature adjourns this Friday, and the House and Senate continue to wrestle with the insurance bill. The Senate passed SB 408 on Tuesday only to have the House make major amendments to key provisions today. At the top of the list is, again, property insurers’ coverage of sinkholes.

On the House floor, the bill’s sponsor put the issue succinctly: “The problem with sinkholes is not sinkholes. It’s a problem with our statutes.”

Insurance companies agree. The bill they favor reduces insurers’ risk by establishing a two-year statute of limitations on claims and narrowing the definition of a sinkhole. A different payout mechanism is also included: Insurers would pay half the claim up front and then reimburse for actual replacement costs up to the policy limit. The complaint has long been that homeowners make a claim and use the benefits for something other than the home repair.

The proposal also would allow insurers to unbundle sinkhole coverage from general property policies. The assumption is that basic homeowner insurance rates would be less volatile, and policyholders in low-risk areas wouldn’t be subsidizing sinkhole claims for the hardest-hit counties.

This is where the Senate and the House part ways.

The House would not change the current requirement that insurers include sinkhole coverage in all homeowner policies.

Opponents of the Senate version say the bill is clearly pro-insurance company, offering the industry advantages that put the consumer at a disadvantage. Consumers will pay more for less, they argue, and insurance company investors will profit nicely if the bill passes.

The House is expected to pass the bill, and the Senate is expected to amend the House version. With just two days left, both houses will be moving quickly to come up with a bill both camps can agree on.

Source: Daily Business Review, “House, Senate property insurance bills differ,” 05/04/11

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