Update on Insurance Reform

Governor Scott recently signed into law an insurance reform bill (Senate Bill 408) that will have significant consequences for consumers in the case of a catastrophic hurricane. Insurance companies will only pay the “Actual Cash Value” (ACV) of a damaged property, leaving it up to the property owner to pay the difference between the ACV and the cost of repair. Only after the owner has paid for the replacement work will the insurance company reimburse them for the full cost of repair.

“Upshot”: Property owners should be prepared to have cash on hand to cover the gap between the cost of repair and the amount of money their insurance company will reimburse them in the event of a hurricane. It may be wise to establish an emergency line of credit to help cover the cost of repair in the aftermath of the storm.