Lawmakers in Florida are getting creative when it comes to trying to solve their state’s homeowner’s insurance challenges.

Due to the recent uptick in the number and severity of hurricanes facing the Sunshine State, many insurers and reinsurers have made the decision to leave the state.

According to the Insurance Information Institute, this exodus has resulted in Floridian homeowners paying an average of nearly $4,000 a year in insurance, which is nearly three times the U.S. average. In some instances, homeowners have seen their homeowners insurance costs more than triple.

However, a bill introduced by State Representative Alina Garcia, a Republican from Miami, is looking to help reduce insurance costs for homeowners in the state.

If passed, House Bill 809 and its companion Senate Bill 1070 would bar insurance carriers from placing a coverage limit on a home that would include the value of the land the house sits on, and it would require insurance companies to offer policies that cover only the unpaid principal on a mortgage. This type of policy would satisfy mortgage company requirements that the loan be insured, while at the same time potentially trimming insurance premium costs for homeowners, as the premium is usually based on the full coverage and replacement value of the home.

Since the policy would only cover the unpaid mortgage principal, the bill would require that the policy holder clearly be notified that they are electing to purchase coverage at a limit that is equal to only the unpaid principal balance on of the mortgage loan on their home. Additionally, this type of policy would not cover the contents of the home.

Those in favor of the bill suggest if a home is valued at $400,000, but only $200,000 of unpaid mortgage principal remain, a mortgage-only insurance policy premium would reflect this disparity. However, it may not decrease it that much, as most homeowner’s insurance policies include liability, law and ordinance and other coverage. In addition, insurers have fixed costs they also have to cover, so premiums may not be able to drop significantly.

Critics are also concerned that in the event homeowners incurs a catastrophic losses on their properties with a mortgage-only policy due to a massive natural disaster and are unable to pay to repair the house, there would be a sizable uptick in claims litigation. It is also unclear if condominium associations would allow this type of coverage as it may not fully cover the cost to repair a unit.

The bill has been assigned to the state legislation’s House Insurance and Banking Subcommittee of the Commerce Committee.

Florida is not the only state looking to potentially change homeowner’s insurance rules. In late September, California’s top insurance regulator announced that new rules were in the works to persuade insurers to remain in the state. Over the past 18 months, seven of the 12 largest insurance companies by market share in California have either paused or restricted new policies in the state, highlighted by the departures of State Farm and Allstate in early June 2023. The two major insurers cited the increased wildfire risks in the state and rising construction costs, as the reasons for their departures.