Fee issued on homeowners insurance policies and auto insurance policies will come to an end in 2015
Florida’s so called “Hurricane Tax” on homeowners and drivers is expected to come to an end at the beginning of 2015. Policyholders have been paying an extra fee for their property and auto coverage for some time, but the Florida Office of Insurance Regulation has ordered that insurers put an end to these fees 18 months ahead of when these fees were initially meant to expire. Insurers have until January 1, 2015, to put these fees to rest.
Emergency assessment has collected $2.9 billion from policyholders
Insurers had been charging a 1.3% “emergency assessment” for the Florida Hurricane Catastrophe Fund, which provides an additional layer of coverage for insurance companies. The assessment has brought in some $2.9 billion from policyholders. Much of this money has been used to cover the costs of devastating natural disasters. The last time a major hurricane made landfall in Florida, however, was in 2005. Since then, no major hurricane has come to the state and the need for an emergency assessment fee may be gone.
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State officials believe that emergency assessment fee is no longer needed
State officials suggest that the fee imposed on policyholders are no longer necessary. These fees may have introduced a significant degree of financial stress to some consumers over the course of several years. Homeowners insurance coverage in the state is particularly expensive for coastal properties, and extra fees can quickly become a problematic financial burden for some.
Hurricanes can cause a significant amount of financial damage to Florida, but no major disaster has come to the state since 2005
Some insurers are claiming that the fee is necessary, but these insurers are also eager to comply with orders from state regulators. The Florida Hurricane Catastrophe Fund represents just how damaging a major natural disaster can be. In 2004 and 2005, the fund was heavily used in order to cover the costs of major hurricanes hitting the state in those years. Without the fund, the financial damage that these hurricanes could have done to the state could have been significantly worse.