Insurers Drop Court Challenge as Fla. Clarifies Cancellation Ban

Insurance companies dropped a court challenge this week to a new Florida rule preventing them from immediately canceling some homeowners policies or raising rates.

The rule, which took effect Jan. 31, is a stopgap until a new law takes effect June 1. That new law aims to lower property insurance rates by making it easier for companies to get cheaper backup coverage, among other things.

Companies will have to lower rates in most cases because of that new law, but Gov. Charlie Crist feared some companies would increase premiums in the interim, or would simply cancel policies before it took effect.

The Florida Insurance Council had asked a state appeals court to overturn the rule, arguing it was too vague and didn’t specify whether some companies would have to agree to continue covering customers they had previously notified they were dropping. Companies had also feared the rule would prevent them from canceling policies for several months.

But on Monday, the Office of Insurance Regulation issued another rule clarifying that companies could proceed with plans not to renew policies for customers who had already been notified they were being dropped. Companies will also be able to resume canceling policies when they file their new rates in March, as long as they give policy holders 100 days notice.

“It’s something the companies can live with,” said Sam Miller, a spokesman for the industry group. “The clarification in this order addresses all of our concerns.”