Archive for February, 2010

Florida Home Insurance Cancellations This Year Could Send You Scrambling for Coverage

February 12, 2010

Florida home insurance cancellations are going to continue in the coming year so be on the lookout.

The largest private home insurance company in Florida is going ahead with an approved program to cancel 125,000 home, condo, and mobile home policies.  While this is good news compared to the estimated 700,000 policies it was originally planning on non-renewing, this is still a significant number of Florida homeowners who are going to be scrambling to find new coverage.

Another large national company announced plans late last year to cancel another 60,000 policies as it continues to cut back its exposure in Florida.  Perhaps these cancellations will be more easily absorbed because the company arranged for a regional Florida home insurance company to pick up those policies.  However, there is no guarantee that the policyholders who lose their coverage will be able to find a replacement.  It will be especially difficult for homeowners in Florida’s southern coastal counties such as Dade, Broward, and Palm Beach to find alternative coverage.  It will also be difficult for those with older Florida homes and those built with wood frame construction to find replacement coverage.

Last but not least, home grown Florida insurance companies continue to evaluate their existing risks and to selectively cancel policies.  A portion of this is due to their reinsurance agreements which limit how much risk they can assume in certain zip codes.  Sometimes they make a business decision to cut back on coverage especially in the South Florida counties on the coast.  Finally, some of the newer Florida take out insurance companies eventually reject policies that they’ve previously taken out of the state run insurance company after discovering risks that they don’t want to be exposed to.  This could be a poorly constructed home or a home that hasn’t been property updated or that has not been maintained in good condition.

If those aren’t enough reasons to be concerned about cancellations during the coming year there is one other development that could lead to more cancellations.  A large number of homeowners insurance companies in Florida plan to implement an ambitious plan to re-inspect homes that they currently insure.  Some of those homes could be in poor condition and may not be adequately protected enough to prevent hurricane damage to the home.  If your home is re-inspected by your present insurance company and they find a significant difference between the condition of your home and what their records show, you could join the ranks of those who have been cancelled in the coming year.

Finally, if your Florida home insurance policy is cancelled during the coming year, it is important to pay attention to the quality of the new companies you are considering.  Three companies failed during the past year and had to be taken over by the State of Florida.  In addition, over half of the remaining companies still open for business lost money in the last twelve months.  If you are cancelled during the coming year, it is not the time to buy your Florida home insurance simply on price.  It is essential that you shop around.  Select the wrong company and you could be waiting a long time to be paid after the next Florida hurricane.

As the year unfolds, pay close attention to the news and to your mail box.  This might be the year that you have to face the prospect of losing your Florida homeowners insurance coverage.

Michael Letcher is an executive in the Fortune 500.  Use his on-line consumer database to find low cost Tampa homeowners insurance.  Get his free newsletter and learn about low cost Tampa home insurance at =>


High Priced Florida Home Insurance is Going up Again

February 12, 2010

Depending on the location of your home and the company you are with, your Florida home insurance is going to increase this year by up to 15%.  However that might pale in comparison to the discounts you could lose this year that you presently enjoy from your Florida home insurance company.

Presently, Florida homeowners like you get the benefit of wind mitigation discounts for multiple home features that help make your home more resistant to hurricanes.  Home insurance companies are required to give you this discount under Florida law and a specific formula must be used to calculate it.  It includes discounts for home features like the roof shape, system for removing water, roof to wall attachment methods, and whether your home has hurricane shutters among other things.

Home insurance consumers in Florida have enjoyed these discounts which can be up to 50% of the wind premium on a home.  However, homeowners sometimes are disappointed with those discounts as well.  One homeowner who was showcased in the St. Petersburg Times invested $5,225 to strengthen the garage door and for hurricane shutters on his home in Spring Hill, Florida.  He was very upset to find out that his $5,225 investment would only give him a discount of $16.11!  Other homeowners in Florida have saved a lot more.

Started in 2002 along with improvements to the Florida building code, these wind mitigation discounts were an important step in the process to deliver lower Florida home insurance rates to those with homes less likely to sustain serious damage in a Florida hurricane.  The State of Florida doubled those discounts in 2006 to give some rate relief after the big hurricane seasons of 2004 and 2005.

At the moment with the approach of the 2010 Florida legislative session, home insurance companies are asking legislatures to reduce some of those discounts.  In some areas the companies might have a point.  To begin with, these does appear to be some fraud connected with those discounts.  This fraud can be the result of homeowners misrepresentations and also due to errors in the findings from the home inspection.  Regardless, it could result in homes receiving discounts that aren’t appropriate.  Florida home insurance companies also point out that doubling these discounts in 2006 was more about currying favor with voters rather than coming up with a scientific way to calculate mitigation discounts based on how your home would actually perform during a hurricane.

Some home insurance companies are ordering new inspections to get a better picture on what’s really been done to harden your home.  If a re-inspection on your home produces discrepancies, you might lose some of your discounts and face a massive increase in your Florida homeowners insurance premiums.

As a homeowner, if these discounts were reduced, you would take a major hit on the cost of your Florida home insurance.  And this would occur during one of the poorest economies of our lifetime. For some homeowners in Florida, losing or reducing those mitigation discounts would result in a massive increase in premium costs.

This is a critical development that all Florida homeowners should be following.  Even slight changes to the mitigation discounts could cause massive increases in Florida home insurance premiums that will make the rate increases already approved look like small change!

Michael Letcher is a Fortune 500 executive who offers an on-line consumer database to help you find affordable Tampa homeowners insurance.  Get his free newsletter and learn about affordable Tampa home insurance at =>

Your Florida Home Insurance Company Might Not Survive

February 12, 2010

Despite three good years of mild Florida hurricane seasons, home insurance companies in the state have not improved their financial condition.  More companies could fail in this uncertain market.

Despite this recent period of mild hurricane seasons, the financial stability of many Florida home insurance companies is anything but stable.  More than 50% of the companies that are writing new business in Florida lost money during the past twelve months.  Three home insurance companies suffered a financial collapse and had to be taken over by the state.  One of the companies that failed wrote new business exclusively in the 12 most southern coastal counties in the state.  Why are these companies failing and why is it that so many companies are losing money?

For starters, Florida home insurance rates have been held artificially low by the state for the past three years by the legislators.  While it has been politically popular with voters to do this, low rates have contributed substantially to the poor finances of these companies.  Florida’s state run insurance company – the largest company in the state sets the benchmark for rates in the market.  Because it does not charge enough for the coverage it offers, private companies are forced to keep their rates lower – whether they are losing money or not.  Newly formed companies that take policies out of the state run insurance company have to price their policies at or below the state run company virtually guaranteeing that they will lose money from the start.

There has also been an increase in non-hurricane claims and reopened claims from prior hurricanes.  The tough economy is a factor because anyone who experiences a loss when times are tough is more likely to file a claim in the present environment.  At the present time, home insurance companies in Florida are also experiencing more fraudulent, suspicious claims.  This fraud can involve filing a claim during normal rain storms in order to get money to fix an outdated roof.  It could also include suspicious fire claims along with theft claims from home burglaries that include high value items the homeowner never owned.  Finally, there has been a rise in new and re-opened hurricane claims from the storms of 2004/2005 which led directly to the collapse of one company that had exhausted its reinsurance coverage.

Finally, investment returns are significantly down.  Homeowners insurance companies in Florida are always on the lookout for ways to earn a safe return on their excess cash.  That’s not easy for fund managers to do with the poor condition of the financial markets.  Rates of return on low and risk free investments are way down in this slumping economy with low interest rates.  Locating investments with high rates of return for purposes of investing surplus cash could result in too high of a risk level.  After all, it is unacceptable for your company to deny or delay your claim because it lost your money by investing in a risky stock market.

Your first reaction to the poor performance of these companies might be one of very little concern.  After all, why should you care if an insurance company makes money?

Even if you are the biggest hater of insurance companies ever born, it is still important for your company to make a reasonable profit – especially in years when there are not any hurricanes.  During those mild periods, these companies are supposed to earn a lot more in premium and have a lot less going out the door for claims.  The fact that this hasn’t happened for most companies should be sending out alarm bells across the state of Florida.

Politicians have told you that large insurance companies are evil and it is possible that some of them are.  But it is the newest, smallest home insurance companies that can’t make money in these mild non-hurricane years.  These companies are the future of Florida home insurance.  If they can’t make even a small profit during mild, non-hurricane years, you shouldn’t expect them to have the money to pay your next Florida hurricane claim.

If you are looking for a new homeowners insurance company, now is not the time to be buying based on price.  You have to do your research.  If you simply buy the lowest price policy, you’ll be the one struggling financially if your company goes out of business and has to be taken over by the state.

Michael Letcher is a Fortune 500 executive and a licensed CPA.  His on-line buyers guide can help you find, screen, and contact low cost Tampa homeowners insurance companies.  Learn about affordable Tampa home insurance in his free newsletter at =>

Homeowners Insurance in Florida – More Problems Ahead in the Coming Year

February 12, 2010

Don’t be fooled by the peace and quiet Florida has enjoyed during the last three hurricane seasons.  There will be plenty of storms in the Florida home insurance market in the coming year.

To begin with more rate increases are on the way.  The state’s largest insurer of last resort will be passing along increases of up to 10% depending on where you live.  Private Florida home insurance companies have been approved for increases ranging from 10-15%.

Those rate increases might not sound alarming to you.  But they are happening during one of the worst economies in our lifetime.  In addition, Florida recently passed Texas with the highest home insurance rates in the nation.  So a 15% increase on a very high premium to begin with could bring you a nasty surprise.  Finally, while these are average rate increases, expect to pay a lot more if you live in South Florida Counties such as Dade, Broward, or Palm Beach.

Florida home insurance policy cancellations will continue to occur during the coming year.  The largest private Florida home insurance company recently received approval to cancel 125,000 policies over the next two years.  Late last year, another national carrier received approval to drop 60,000 policies.  Again, there could be a lot more cancellations in major areas such as Miami, Tampa, and West Palm Beach especially for older homes and homes close to the coast.

Watch for fewer discounts in the coming year.  Fewer discounts could add to the 10-15% rate increase you will already be facing.  Your company could discontinue discounts you’ve been enjoying for being claim free and multi-line insurance discounts.  Last but not least, Florida home insurance companies are concerned about the wind mitigation discounts you get for replacing your roof or installing hurricane shutters.  If they are successful in challenging those discounts in the upcoming session of the Florida legislature, you could end up paying a lot more.

Homeowners insurance companies in Florida are beginning to fail at an alarming rate – especially when you consider that we’ve been hurricane free for the past three years.  Last year three companies failed financially and were taken by the state.  During the past twelve months over half of all the active Florida home insurance companies in the state lost money.  As a consumer you might not care about that.  But you will if these companies don’t have enough money to pay your claim after a major hurricane.

Finding multiple companies willing to cover you is going to continue to be difficult during the coming year.  Besides the fact that the larger companies are continuing to cancel policies, new companies are not being created fast enough to pick up the slack.  The most difficult homes to cover will continue to be old homes, coastal homes, and wood frame homes.  Coverage will also continue to be difficult to get in the sinkhole prone counties of Pasco, Hernando, and Hillsborough.

All of these developments mean that you should expect Florida home insurance to cost more this year while it continues to be hard to find.  Even worse, you could pay high insurance rates and still end up with a company that won’t have the money to pay your next Florida hurricane claim.

Now more than ever, it is essential that you don’t buy Florida home insurance just on price.  If you do, you will have no one to blame but yourself if you have trouble getting paid after the next Florida hurricane.

Michael Letcher is a Fortune 500 senior executive and a licensed CPA.  His on-line buyers guide can help you find low cost Tampa homeowners insurance.  Find out the secrets to low cost Tampa home insurance in his free newsletter at =>