Insurance Reform  | Affordable Housing  | Property Tax  | Transportation Funding

Insurance Reform FAQs

1. Why are property insurance rates rising so quickly?
2. What is Citizens Property Insurance Corporation?
3. Why am I being assessed for Citizens Insurance if they are not my insurer?
4. What is an assessment and why is it needed?
5. How much will the average consumer pay for the 2006 assessment?
6. Why did my insurance company drop my policy even if I haven't had a claim in years?
7. What have Florida’s leaders done to address the insurance crisis?
8. What can I do to make myself more insurable?

1. Why are property insurance rates rising so quickly?
Homeowners have been faced with double and even triple digit tax rates due to the rise in property value. Material costs to replace a home have also doubled. As a result of these increasing rates, insurance premiums have increased.

2. What is Citizens Property Insurance Corporation?
Citizens Property Insurance Corporation is the state’s entity to address the insurance availability deficit that exists in Florida. Citizens Insurance provides insurance to homeowners in high-risk areas and others who cannot find coverage in the open, private insurance market. It was designed to be the state’s insurer of last resort. Therefore, Citizens insures the properties most at risk to be damaged in the state, especially for properties along coastal regions and those subject to sinkholes.

3. Why am I being assessed for Citizens Insurance if they are not my insurer?
Citizens Insurance receives no direct state government funding; its claims and operational costs are paid from premiums collected. If Citizens runs a deficit within a fiscal year, it has the authority to assess all property insurance companies to cover the amount of the deficit. These assessments are passed on directly to the policyholder when an insurer files a rate increase which is approved by the Florida Office of Insurance Regulation.

4. What is an assessment and why is it needed?
As a result of 2005 storms, Citizens Insurance incurred more than $2.6 billion in losses, stemming from 168,377 claims. Because of these losses and insufficient premiums to pay those claims, Citizens had a shortfall of $1.7 billion. Under Florida law, this amount is to be recouped by an assessment on property insurance companies statewide to ensure Citizens is able to pay claims in the event of future storms.

5. How much will the average consumer pay for the 2006 assessment?
During the 2006 Legislative session, $715 million was appropriated to offset a portion of this Citizens deficit. Prior to the relief, policyholders would have had to pay approximately $203 per $1,000 of insurance premium. With the relief provided by the Legislature, that amount will be reduced to less than $33 per $1,000 of premium. That action by Florida’s leaders will save policyholders $170.50 per $1,000 of insurance premiums paid.

6. Why did my insurance company drop my policy even if I haven't had a claim in years?
Because of the heavy losses that insurance companies have had over the past two years, many companies no longer have the assets needed to cover new losses. To stay in business, insurance companies have to limit or reduce exposure. In many cases, reducing the number of policies a company has in a particularly vulnerable area is their only option. Insurance is a year to year contract with a company, not an investment. The policyholder buys insurance for one year in exchange for one year of protection. If there is no storm and no damage, the insured was simply protected for one year.

7. What have Florida’s leaders done to address the insurance crisis?
Government has tried to be all things to all people and that just does not work. In retrospect, the government should have made coastal development impossible or, at least, extremely difficult. Instead, the state made the policy decision to provide insurance to homes that the private market deemed too risky. This has led to the development of areas that should never have been developed for habitation. If the private market would not insure homes in these risky locations, development would not have occurred. For that, government is at fault, although it was due to public demand that this decision was made.

In order to address this problem, the Legislature passed bills that increased public protections, reduced insurance fraud, and provided incentives for property owners to harden their homes to make them more storm resistant. The Legislature expanded the Florida Hurricane Catastrophe Fund (CAT Fund) to increase the state’s reinsurance capacity. The Legislature provided relief to property owners who were hit by more than one storm during the 2004 season. For residential policies issued on or after May 1, 2005, the hurricane deductible is applied on an annual basis, rather than a per-event basis, to all hurricanes that occur during the calendar year.

Most recently, the Legislature provided $715 million to offset the 2005 deficit in Citizens. To help residents make their homes more resistant to storms, the state is providing $250 million through the Florida Comprehensive Hurricane Damage Mitigation Program. Access to the Florida Hurricane Catastrophe Fund (CAT Fund) was increased in an effort to attract more insurers to write policies in the state. The Insurance Capital Build-Up Incentive Program was established to provide for up to $500 million of greater insurance capacity in the state. The operations of Citizens was revised to make it more efficient and user-friendly and a process was set up for the evaluation and resolve sinkhole claims.

8. What can I do to make myself more insurable?

Protecting your home against damage can reduce the cost of your insurance premium. Florida requires insurance companies to give a discount on insurance premiums – as much as 44 percent on your hurricane policy – for certain improvements that guard against wind damage. Choosing a higher insurance deductible, either 2 percent or 5 percent, can also reduce your premium.

To help homeowners make these improvements, the Florida Comprehensive Hurricane Damage Mitigation Program will perform free inspections and provide grants to qualified homeowners who harden their homes to reduce the risk of wind damage. Individual homes will be eligible for matching grants of up to $5,000 each to make specific home improvements as recommended in the inspection report.
For example:

• If the recommended improvements you have done cost $3,000, the state would pay $1,500 and you would pay $1,500.
• If the recommended improvements you have done cost $20,000, the state would pay $5,000 and you would pay the other $15,000.
• Low-income homeowners will be eligible for $5,000 grants with no match required. Matching grants will also be available to local governments and non-profit entities for projects that will reduce hurricane damage to single-family homes.

Affordable Housing FAQs

The area median income (AMI) is an amount that divides income distribution into two equal groups, half having income above that amount and half having income below that amount. This is considered a more accurate indicator than the average income in that it is not affected by dramatically high or low values. 

How is the value of property assessed? The local property appraiser assesses a value  for all property.  Taxpayers may be eligible for certain exemptions. Check with the county’s property appraiser for more information. Any exemptions are deducted from the assessed value. The final amount is the taxable value of your property. The notices that state the proposed property taxes and assessments, including any exemptions, for property are mailed in the late summer.

How are property tax rates set? Property tax rates are set by millage which is $1 for every $1000 of the property’s taxable value. The governing board of the taxing district decides the millage, or tax rate at a public hearing. Taxing authorities - city and county commissions, water management districts, school boards and special districts - propose a tax rate or fee that will be needed to support their budgets.

What are non-ad valorem or special assessment?  Non-ad valorem assessments are fees for specific services. It is set by taxing authorities such as cities, counties, and independent special districts for mosquito control, fire or ambulance service, solid waste disposal and others. These fees may be included on the Notice of Proposed Property Taxes as non-ad valorem assessments or mailed in a separate notice.

What is tangible personal property? Business owners primarily owe tangible personal property tax. Equipment and other items that are used in businesses but are not considered in the assessed value of the business’ real property are taxed as tangible personal property. For a business, this may include office furniture, computers, tools, supplies, machines and leasehold improvements. Inventory that is for sale as part of a business is not taxed. Homestead property and household goods and items are exempt from this tax.

When are taxes collected? The local tax collector’s office sends tax bills for the current year in November. Taxpayers have until April 1 of the next year to pay these taxes. Tax bills not paid by April 1 are considered delinquent.

What is the homestead exemption? The homestead exemption is a $25,000 exemption that applies to the assessed value of property. Every person who has legal or equitable title to real property in the State of Florida and who resides on the property on January 1 and in good faith makes it his or her permanent home is eligible for a homestead exemption. When filing for the exemption for the first time, be prepared to answer these questions:

What Is Save Our Homes? The Save Our Homes (SOH) state constitution amendment was approved by Florida voters in 1992, and became effective January 1, 1995. SOH places a limitation of 3% on annual assessment increases on homestead exempt property. For all property first granted homestead exemption in the prior year, that year’s assessed value will be the base value for the implementation of Save Our Homes. Thereafter, the assessed value of the property will not increase more than 3% or the percentage change in the Consumer Price Index, whichever is less. The property’s market value may differ from the SOH assessed value. SOH assessed value will never be greater than market value.

What properties are affected Save Our Homes? Homestead exempt properties only.

What happens when I sell my property and buy a new home? When a homestead property sells, the SOH assessed value returns to market value in the year following the sale. That market value assessment then becomes the base value for SOH purposes for the new owner/homestead applicant.

What happens to the value of my homestead property when I make additions or improvements? The additions or improvements are valued at market value in the year of construction, and that value is then added to your capped assessment. SOH then applies to these additions/improvements in subsequent years.

What is the Taxpayer’s Bill of Rights? In 2000 the Florida Legislature created the Taxpayer’s Bill of Rights for property owners in the state of Florida. It guarantees that the rights, privacy, and property of Florida citizens are safeguarded during the assessment, levy, collection, and enforcement of property taxes. The Taxpayer’s Bill of Rights is contained in section 192.0105 of the Florida Statutes.

Transportation Funding FAQs

How are county transportation projects funded?

A portion of the State and Federal funds are prioritized for expenditure by MPOs. Each year, the MPOs establish a list of project priorities. These include small scale projects like congestion management and transportation enhancement projects, and major improvement projects such as widening significant State and regional roadways. Locally, via the Capital Improvement Program (CIP), small-scale projects have fixed set-aside funds in the program, and a few of these projects get funded each year.

What are the revenue sources used to build roads?

• State and Federal transportation improvements are funded with motor fuel taxes.
• Sarasota County uses several revenue sources to fund road construction. They include fuel taxes, road impact fees, property tax, infrastructure surtax and telecommunications tax.

updated 1/24/2007