Certain states experience a struggle with Homeowners Insurance that most of us never will because of Hurricanes. Florida has become one of the top states to experience hurricanes even though many other states have experienced worse hurricanes. Florida consistently gets hit with hurricanes, and it has caused many private insurers to pull out. The state has had to step in and figure out a way to provide homeowners insurance to those whose companies up and left, but now years later, they are realizing that the majority of the state are insured by Citizens instead of by private insurance companies. Now they must figure out how to get insurance companies to come back and insure in Florida.
While not every state has problems losing all their insurance companies due to the weather, every state has trouble with regulating Insurance. This is why legislation gets involved. We often think that the government getting in the way and making things worse, but sometimes they are trying to do the best for us. Florida is a prime example of legislation and regulation working together to provide the best insurance options they can for the people of their state.
Insurance companies began to pull out of Florida when they began to sense they will not be able to make money due to the amount of damage the area experiences. Florida experiencing hurricanes consistently caused insurance companies to realize no matter how much they charged their clients’ deductible would almost always be met. Legislation needed to make a new provision for Insurance for their customers.
The state will take control and provide a solution for common coverage for individuals and businesses for homeowners, automobile, and workers comp. The state creates a system to help support those who cannot receive the insurance they need due to circumstances whether insurance companies begin to pull out or a poor driving record or a long term disability. However, there are a few risk pools that exist to help individuals out include for homeowners insurance which is known as Fair Access to Insurance Requirements.
So how can FAIR be in place and yet create a different situation for Florida? The risks in Florida are over balanced. What does that mean? It means the entire state of Florida has the same risk across the state. With the majority of the state being bordered by ocean, wind storms and hurricanes are a huge risk anywhere. If a majority of people experienced damage from these all at the same time, the FAIR plan would quickly become overwhelmed and drained of its resources. Most other states have a variety of threats and do not all hit on the FAIR plan all at once. Citizens Property Insurance came out as a result.
The problem is the majority of a state will eventually become reliant of these plans and begin to drain those too. Florida now is in trouble due to this fact, and legislation is working on a way to bring insurance agencies back in. The Citizen Insurance will be to be limited in its availability, and people will be forced to return to private insurance.