Many Florida homeowners are concerned that a hurricane tax would be imposed on the state as hurricane season approaches.
Debris from homes swept off their lots chokes a canal amid homes on stilts which remain standing, in Horseshoe Beach, Fla., on Thursday, one day after the passage of Hurricane Idalia. (Source: NBC News)
Rise in Insurance Cost and Imposing of Hurricane Taxes
While Hurricane Idalia spared Southwest Florida, there is concern that another major hurricane might hit any section of the state, leaving everyone with repair expenditures for years to come. If a private insurance firm is hit by a major storm and cannot afford to pay out, it may go bankrupt. Citizens, on the other hand, can’t go bankrupt, thus taxpayers statewide — including those who don’t own a property in Florida — are on the hook.
Shawn Barker of Punta Gorda said it’s on his mind, and the minds of every Floridian, that insurance costs could rise even more. Back in Florida last March, Governor Ron DeSantis warned that Citizens just did not have the money to service its more than 1.3 million policies. DeSantis thinks that as most people know, Citizens have not been solvent; if they did have a major hurricane hit with a lot of citizens’ property holders, it would not have enough to pay out.
Citizens now have roughly $4.8 billion in the bank, and Idalia claims are projected to consume a major portion of it because Citizens is the largest insurer in the Big Bend region where the storm made landfall. According to Mark Friedlander of the Insurance Information Institute, an examination conducted before the storm revealed that Citizens had more than 190,000 policies in the areas that would be directly impacted by Idalia. “In the worst-case scenario, Citizens would lose $72 billion,” Friedlander added.
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Hurricane Taxes to be Discussed and Could Possibly Imposed to Everyone.
While the loss isn’t huge, the only way the state-run company can make up for it is to levy a hurricane tax on everyone. That, according to Reid McDaniel of McDaniel Insurance Solutions in North Fort Myers, is the major issue. McDaniel wants fewer and fewer people as Citizens because of the problem it poses, not just for citizens and policyholders, but for Floridians all over. This insurance fee would also apply to auto and renters’ insurance.
It happened last in 2004 when ten hurricanes devastated the state, and Floridians were stuck paying off citizens’ $1.7 billion payments until 2015. Citizens are aware of their vulnerability. The corporation recently requested a 12% increase from the state, which was denied, and while this may save policyholders money, it may wind up costing all of us in the long run.
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