A controversial bill has been passed by Florida’s Senate Banking and Insurance committee. The bill could increase the premiums paid by customers of Citizens Property Insurance by 25% and will eliminate coverage for some homeowners over time for properties whose value exceeds $500,000. Strict requirements will also be imposed, preventing homeowners from being able to enter the insurance program unless their only alternatives are 25% more expensive than coverage offered by Citizens.
Representative Alan Hays of Umatilla, one of the bill’s sponsors, claims that raising premiums is the very last thing legislators want to do in trying economic times. “But we absolutely must,” he says.
Citizens, as well as other insurers around the nation, have warned of the need to raise rates for some time, citing increasing costs of operation as the primary factor for doing so. Private insurers in Florida have diminished over the years, making Citizens the largest provider of property insurance. The bill could potentially affect nearly 1.3 million policy holders in the state.
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Opponents of the bill argue that Citizens was supposed to be a provider of affordable insurance policies. Indeed, the company has had a reputation of providing inexpensive coverage for those that could not find policies anywhere else. Furthermore, Senator Gwen Margolis of Miami says that the bill could have a negative impact on the ailing real estate market.
“The cost of insurance is just too high and we are not going to get new residents in Florida because of it,” says Margolis.
The bill has yet to reach the state Senate and will continue to be debated, with the first hearing scheduled for later this week.