While a new federal law gives many Florida homeowners some relief from soaring flood insurance rates, there is more work to be done. In Washington on Wednesday, Rep. David Jolly introduced legislation that would extend the same relief to owners of second homes and to businesses. In Tallahassee, the state Senate unanimously passed a bill that would enable private insurers to sell flood insurance to Florida homeowners seeking a better deal than the federal flood insurance program offers. Both efforts should be pursued so that property owners are treated fairly and have as many options as possible.
The new federal legislation may be a long shot, but it is worth the effort by Jolly, R-Indian Shores, and Reps. Kathy Castor, D-Tampa, and Gus Bilirakis, R-Palm Harbor. The new flood insurance law signed by President Barack Obama last week no longer requires subsidized flood insurance rates for owner-occupied homes to be reset to actuarially sound rates when the home is sold. "Grandfathered" properties that were initially built to flood codes and later drawn into a higher-risk flood zone but not required to pay higher rates also will keep their subsidized rates. But those changes did not apply to second homes or to business properties.
Jolly's legislation would extend those same protections to businesses and to second homes that are not used as investment properties, such as rentals. That is particularly important to Tampa Bay, particularly along the beach communities where there are so many second homes. Members of Congress from other parts of the country complained about subsidizing flood insurance for mansions on the beach, but many of those second homes along the Pinellas beaches are more modest and will be difficult to sell if the flood insurance rates reset to absurd levels when those homes change hands.
In the state capital, the Florida House should take a close look at the bill sponsored by Sen. Jeff Brandes, R-St. Petersburg. The bill, SB 542, encourages private insurers to enter the flood insurance market and gives property owners more options. Unlike the federal insurance program, private insurers could offer policies that would cover only the outstanding mortgage, the replacement cost of the property or its cash value. The federal program has a hard cap of $250,000 in replacement coverage. While the private flood insurance policies would not be subject to the same rate approval requirements by the state as other policies, some modest consumer protections have been added so that the state can take action if the rates are deemed to be excessive. There also are additional disclosure requirements to better ensure property owners understand the terms of the policies, and insurers also will have to offer a policy similar to the federal insurance policy so that consumers can make a more direct comparison.
The federal flood insurance changes that were signed into law last week helped many Florida property owners, but too many others still face unreasonable rate increases and unfair treatment. Lawmakers in Congress and the Florida Legislature should continue to work on their behalf.