Two kinds of residents can ignore the disaster that is Florida wind and flood insurance coverage: The mega-rich for whom a $20,000 annual bill is budget dust and the feeling-lucky homeowners with no mortgages. (Although why anyone would play Key West insurance chicken with hurricanes and floods is beyond me.)

Wind insurance and lately flood insurance in Florida is a swamp of Everglades proportion. Monroe County residents pay more in premiums than we get back in claims — to the tune of about $805 million more over the past decade or so — and that includes Hurricanes Wilma and Irma. We also pay the highest premiums in the state. And, no, we have not had the worst storm damage. Those honors are recently reserved for such as the panhandle (Michael) and the west coast (Ian).

So, in December 2022, the Florida legislature met in special session to “do something” about wind and flood insurance coverage. It was the second time in months, they’d tried to do something. What they did in December pretty much ought to make you bolt upright, because it ain’t good.

At least it’s not good for homeowners and businesses.

Key West insurance: New law; less protection

Here’s your TL;DR (too long; didn’t read) version of what is now Florida law:

• Citizens will dump your wind policy permanently if a private provider offers you a policy up to 20 percent higher than what you pay Citizens. Paying Citizens $10,000 today? If you get a private offer of $12,000 on your renewal date, Citizens “depopulates” you and you have no right to say “no.” The private insurer is then free to raise your rates by 20 percent annually. Under the previous law, you could say “no” and stay with Citizens. I’ve done that. The legislature doesn’t seem to have answers to what happens if said private company goes belly up. Those companies tend to make profits in low-storm years, then leave the state holding the bag when claims pile up. The legislature doesn’t have an answer to what the Keys are supposed to do since Citizens, the state’s wind insurance provider of last resort, is pretty much Monroe County’s only provider.
• Flood insurance is now required if you’re with Citizens. The federal government via FEMA is the only provider of flood insurance nationwide, even though your policy might be handled by a name brand insurance company. A complicated FEMA algorithm determines your rate. Homeowners with mortgages have long been required to have flood insurance. Any old homeowner can buy flood insurance although many opt not to do so. Witness the nightmare confusion with Hurricane Ian up the coast. Folks had wind insurance; few had flood. It was flooding that did them in. So, the legislature voted to require flood insurance for anyone who has a Citizens’ wind insurance policy. Honestly, that’s OK with me — I’ve long had flood insurance so my old (cheaper base) rates are grandfathered in. It’s going to wreck budgets to the tune of thousands of dollars annually as this new requirement is phased in beginning in April for new policies and in July for renewals, even if you’re not in a flood zone.
• Citizens won’t pay your legal bills — even if you win. In the past, if you sued Citizens successfully for denying or underpaying a claim, you could recover legal costs from Citizens. No more. And, you now have to prove your damage was NOT caused by flooding. Used to be Citizens had to prove the damage WAS caused by flooding. So, when the roof blows off and the storm surge comes and it’s raining to beat the band, you’ll have to prove it wasn’t flooding at fault.
• The “glide path” no longer applies to non-primary residences that have Citizen’s policies. The glide path used to limit increases to Citizens’ premiums. With the new law there’s no limit on premium increases for homes that are not primary residences or that do not have a long-term rental tenant for at least nine months annually. Here’s the current glide path caps for primary-resident homeowners: 11 percent 2022, 12 percent 2023, 13 percent in 2024, 14 percent in 2025 and 15 percent in 2026 and all subsequent years.

The Florida legislature says it’ll have another crack at this side show and all the unintended consequences during the regular session. I’m not holding my breath.

Disclaimer: You’ are not alone if your eyes glaze over trying to understand how insurance works in Florida. No one knows, actually, or as soon as they do, it ups and changes. But for Key West and Monroe County, the not-for-profit, grassroots advocacy organization, Fair Insurance Rates in Monroe (FIRM), has long been my one-stop source for comprehensive and understandable information.

I’m a FIRM board member and write them donation checks. So, yeah, potential for conflict of interest here. But, since FIRM advocates for and educates Monroe County homeowners and businesses, it’s a worthy cause.)

Resources:

• Understanding Monroe County Wind and Flood Property Insurance (Note: Does not yet include updates from the December 2022 legislative session)
• Become a member of FIRM
• What’s happening with flood insurance: Risk Rating 2.0
• Stay up-to-date on wind and flood insurance, policies, legislation and action
• How do wind and flood insurance costs affect your home-buying decision?