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NEW PORT RICHEY, FL -- Jim Newman is like the thousands of Florida homeowners whose only option for insurance is the state-run Citizens Insurance. Today Jim has no idea how much he'll be paying for that insurance come year's end.
"It is what it is. If it goes up ten percent we have to have the coverage and we pay for it,” Newman says.
That's a very real possibility. Right now, there is a freeze on Citizens rates throughout 2009. But, on January 1, the freeze expires. Lawmakers like Senator Mike Fasano fear if the legislature doesn't act, rates could soar.
"If we don't at least cap what Citizens can raise their rates, it'll be unlimited starting January 1 and rates could rise 30 or 40 percent."
Fasano says what Citizens is charging customers today isn't enough to cover claims in the event of a major storm. Still he wanted to freeze rates for another year. When that got voted down, he proposed capping a rate increase at 5%. The proposed senate bill caps it at 10%. A version in the House caps it at 20%.
But, even Fasano admits it's a big roll of the dice. If a major storm hits any part of the state we all end up paying more. Any policy holder in the state, be it car insurance, life insurance, or home insurance will have to make up the difference by paying more into the state's catastrophe fund.
Bill Newton with the Consumer Action Network says that's a bad plan.
“The legislature has frozen rates because it is politically expedient, because it's popular, but that is not good business," Newton says.
Newton says it's good for consumers in the short run, but not the long run. "We’ve been lucky the past couple of years. But if we're not lucky it's going to wipe us all out," Newton says.
Newton says a rate increase will help prepare the state for the worst. Though he too thinks any rate increase should have a cap. He also wants to see the state seek reinsurance for citizens outside of Florida, spreading out the risk. But, that too costs money.
Senator Fasano says many homeowners are already in a financial storm of their own. "If we all of a sudden get rid of the freeze or at least don't cap the rates that Citizens can charge, we'll see a lot more homes for sale or being foreclosed on in the Tampa Bay area," Fasano says.
Both Florida’s House and Senate continue to debate both bills that are out there. They will eventually come together to combine their proposals to put to a vote.
So, what can homeowners do in the meantime? You can start by lowering your own risk, by “hurricane proofing” your home. Florida has the “
My Safe Florida Home” program that outlines steps homeowners can take to decrease their risk and ultimately their insurance rates.
The state also has a website where homeowners can compare prices and see other options available to them.
ShopandComparesRates allows you to choose your home value and then your county and it will generate a list of available policies and an average rate they cost.
