A bill signed into law last week by Gov. Rick Scott, H.B. 1101, creates rules that allow homeowners to submit home replacement cost valuations to the state-run insurer of last resort, Citizens Property Insurance. HB 1101 creates new rules for other types of insurance, too, but the key issue for Florida’s real estate industry relates to the use of property valuations in calculating insurance costs. Until early 2012, Citizens relied on a single vendor, 360Value, to calculate the cost to replace a home if it was destroyed – the home’s replacement cost. The amount of an insurance premium is based, in part, on how much it would cost to rebuild the home, and critics claimed that 360Value overestimated replacement costs, which led to over-charging homeowners for insurance.
In January, following discussions with Florida Realtors and policyholders, Citizens agreed to expand the way it operates, however; and the passage of H.B. 1101 reflects the change in Florida law. Under the new law, a homeowner can submit a valuation from one of three sources, provided data was compiled within the previous 12 months and includes an itemized calculation. The sources can be:
• Any replacement cost software program, providing it’s designed specifically for that task.
• An evaluation prepared by a Florida certified or licensed real estate appraiser.
• An evaluation prepared by a licensed general, building or residential contractor, or one from a licensed professional engineer.