First look at 2011 insurance proposals

News stories recently carried quotes from Senate Banking and Insurance Chair Garrett Richter on what we might expect to see in one of the 2011 insurance bills.  It will be a replay of 2010’s S 2044, vetoed by Gov. Crist.  

Sinkholes:  you’re having too many of them, so you’re going to have to prove, really prove that that’s what is destroying your home.  Expect this to be part of a trend toward insurance companies not paying claims without a heck of a fight.  No more good neighbor.

Hurricanes:  you’ll have to figure out your total hurricane damage within two or three years, or tough luck.  And there won’t be as many public adjusters available to you because they’ll be more regulated.  And you’ll have to prove to the insurance company that you’re doing the repairs.  It’s not your money, it’s theirs and you have to spend it the way they say.

But there could be far worse in store. We expect a proposal to limit “bad faith” law suits against insurance companies.  Bad faith means the company isn’t doing what it should under the contract you have with them.  There are punitive damages, and the damages in your original claim are magnified because the company is trying to cheat you.  Bad faith laws compel the insurer to settle with you in a timely fashion rather than say, sandbag until you are out of money, then force you to accept a lowball offer.  But, tough luck.

And Gov. Scott says he wants to depopulate Citizens, the state’s largest insurer.  I’m not sure how you do that without driving up insurance rates dramatically.  We don’t need that in the middle of a recession.  I’ll look for more detailed plans and comment as they come out.