INDUSTRY IMPACTS immediately . The groups warned that the rule will disrupt insureds , insurers and agents already dealing with escalating premiums and capacity issues .
“ Requiring , without exception , that all consumers with mortgages owned by Fannie Mae and Freddie Mac obtain full replacement cost coverage will logically , by the very nature of this mandate , exacerbate existing challenges ,” the letter reads . “ While the GSE guidance is no doubt well-intentioned , it establishes requirements that will have a real-world impact on the many homeowners who are unable to satisfy the coverage requirements or who are forced to purchase a higher-cost insurance product in order to do so .”
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... policies that are favored by insureds who may not be able to afford replacement-based premiums .”
Insurance agents would be left in a tough position by such a rule change and would have to inform homeowners that an option to help limit premium spikes is about to be taken off the table , the letter noted . And some property insurers have entire product lines that offer ACV for homes with mortgages , policies that are favored by insureds who may not be able to afford replacement-based premiums , said Jimi Grande , senior vice president for federal and political affairs at NAMIC .
It ’ s not clear how much of a change the guidelines create , and why the replacement value rules are in place now , in the midst of a hard market and burgeoning loss costs for property insurers . But the NAMIC and Big I letter [ clearly now ] did some good : Federal housing finance officials are expected to announce later this week [ and did May 8 ] that they are willing to put a pause on the new guideline and speak with stakeholders .
“ We ’ re thankful . It sounds like FHFA will postpone this rule and let stakeholders come together and talk about it ,” said Nathan Riedel , senior vice president for federal government affairs .
Offering actual cash value has been a growing trend around the country in recent years , but especially in Florida and especially for roofs . Insurer advocates have called ACV a simpler , fairer way to cover roofs in the wake of thousands of Florida roof claims that insurers said were fraudulent or exaggerated by some public adjusters , unscrupulous roof contractors , and by some plaintiffs ’ lawyers .
Florida lawmakers have repeatedly introduced legislation that would have allowed more policies to cover only the current value of roofs , as opposed to full replacement value , which can add thousands of dollars to the cost and hundreds of dollars to premiums .
“ It ’ s about 25 % more expensive to go with replacement value than with ACV ,” said Scott Johnson , of Tallahassee , a longtime insurance educator , author and consultant .
Senate Bill 1728 , introduced in the Florida Legislature in 2022 , came close to allowing more policies to provide only ACV coverage for some homeowner roof claims . The bill passed the Senate that year but died in the House of Representatives .
Since then , though , the Florida Office of Insurance Regulation has allowed something of a work-around : Regulators interpreted existing state law to allow carriers to offer optional endorsements that limit roof replacements and limit the amount that a policy will pay to cosmetically match new roof material to old . Several carriers have moved quickly to offer the endorsements in the last year or so , giving insureds an option .
In 2022 , Florida Senate Bill 4D also revised building codes . The codes now no longer require full roof replacements when only part of the roof is damaged .
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