Q&A of the Day – DeSantis’ Plan to Cut Florida Property Insurance Costs
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Today’s Entry: Brian, please explain the property insurance savings DeSantis has proposed that you referenced this morning. We need all of the help we can get. Thank you.
Bottom Line: While Floridians wait for the effects of the previous property insurance reforms passed by the state of Florida to fully take hold, Governor DeSantis has proposed three items for the upcoming state legislative session that will save Floridians money on property insurance this year if enacted. One is a savings for all property insurance policies, another a benefit for all flood insurance policies and the other is a benefit for those who take advantage of it. In advance of next Tuesday’s start to the state legislative session Governor DeSantis has outlined his Florida’s Future Budget. Specific to proposed policies that would impact property insurance policies, he’s called for a one-year exemption on taxes, fees and assessments for Homeowners Insurance Policies underwritten across the state (up to certain limits). Another proposal calls for a permanent insurance premium tax exemption for flood insurance policies within the state. Those are the proposals which would benefit most homeowners with a property insurance policy. The other potentially beneficial proposal is to make the My Safe Florida Home Grant Program permanent. That’s a program that not only provides state grants to homeowners to harden their homes against potential storm damage but that also carries a permanent savings benefit with future property insurance policies. Let’s start with the proposals that stand to benefit most homeowners.
As outlined in the budget the governor has proposed:
- A one-year exemption on taxes, fees, and assessments for residential property insurance policyholders for $409 million – covering the cost of select taxes, fees, and assessments for residential property insurance policies with a coverage amount of up to $750,000 written between July 1, 2024, and June 30, 2025, for a twelve-month coverage period. These include the Insurance Premium Tax, the State Fire Marshall Assessment, and the Florida Insurance Guarantee Association (FIGA) Assessment.
- A permanent insurance premium tax exemption on Flood Insurance Policies for $22 million – reducing the cost of flood insurance policies effective on or after July 1, 2024.
In terms of what this means in potential savings for you I’ll start with the smallest one first. The insurance premium tax is one of eight types of taxes imposed on insurance policies within the state and specifically it’s one of seven imposed by the state on insurers. Should the proposal pass, and should the savings be passed onto policy holders, I’ve come up with an annual savings on flood insurance policies of about $13 in today’s dollars. It’s not much but I suppose not much is better than nothing. As for the proposed one-year exemption on taxes, fees, and assessments – that one’s a little more opaque. In announcing this proposal, the Governor’s office put out a note saying that the savings if enacted would be “up to 6%”. However, based on the amount budgeted to do this and the number of in-force policies underwritten within the state, I’m coming up with a number that averages about half that at 3%. Still, based on the average current cost of policy renewals, which has jumped to about $6,000, that’s savings which could average about $180 per policy.
So, on average Floridians who carry both property and flood insurance coverage might expect savings of about $200 this year if those policy proposals are enacted. As for the My Safe Florida Home Program proposal DeSantis’ budget calls for:
- $107 million in recurring funding to make the My Safe Florida Home Grant Program permanent and continue assisting Florida homeowners through home inspections and cost sharing for approved home hardening and wind mitigation programs.
First and foremost, the My Safe Florida program has been a huge win-win for those who’ve taken advantage of it. The way the program works for those who’ve previously qualified is that the state kicks in grants covering $2 in costs for every $1 you spend up to a total of $10,000 for upgrades to exterior doors, garage doors, windows, roofs and decks. So not only is grant money available to be able upgrade your home, which if you haven’t done, you’d probably want to do anyway, but there’s also a huge insurance benefit to doing so as well. As Florida CFO Jimmy Patronis has outlined, the average participant in the My Safe Florida home program, saves about $1,000 on insurance premiums annually due to the home improvements which better protect against storm damage. Based on what the DeSantis budget calls for there would be a minimum of 10,700 Florida homeowners per year who would be able to take advantage of this opportunity. And that also serves as a reminder for any Floridians who’ve upgraded their homes with impact windows, doors, roofs, etc.
If you’ve upgraded your home since your home insurance policy was originally underwritten, have you notified your insurance company of the improvements? Many haven't and that’s a way many Floridians could save significant money on insurance premiums right away independent of what happens in this year’s state legislative session.