WEST PALM BEACH, Fla. – Since the Florida state legislative session in May, little has changed in lowering homeowner’s insurance premiums.
Since January, up to 400,000 Florida homeowners have been dropped from their insurance company or received non-renewal letters.
Also, 275,000 homeowners had to find a new insurance company because their companies went bankrupt, unable to pay their debts.
This week, the Insurance Information Institute revealed that 27 more companies will have their ratings downgraded by Demotech, the organization that rates insurance companies.
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That could reveal more companies on the brink of bankruptcy, adding to what is being described as an insurance crisis for Florida homeowners.
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The Insurance Information Institute reports that Florida homeowners are paying nearly three times the national average for annual property insurance premiums.
The institute said Florida homeowners are paying an average of $4,321 a year when the national average for annual property insurance premium is $1,544.
The reasons include rampant roofing fraud, runaway lawsuits and rising home repair costs, according to the Insurance Information Institute.
Citizens Insurance, the state-backed insurer, is close to a million customers. It was half two years ago.
Mark Friedlander with the Insurance Information Institute said the current model cannot be sustained.
“It’s literally getting worse by the day. Population growth is completely out of control. An insurer of last resort, a state insurer of last resort, should never be the primary option for homeowners. It should strictly mean the solution to last, last chance. to get coverage. Not the first and only chance to get coverage,” Friedlander said.
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Insurance companies that write policies in Florida took more than $1 billion in insurance losses last year.
The Insurance Information Institute said a fraudulent roof replacement problem, repeated thousands of times, is fueling the problem.
In this process, contractors approach homeowners with an offer to replace their entire roof by first signing an assignment of benefits letter.
This gives the contractor all the rights to negotiate with the insurer, leaving the homeowner out of the process.
These contractors then increase the cost of replacing the roof by tens of thousands of dollars.
Insurance companies try to fight it in court, spending thousands on attorney and court fees.
This has happened so much that insurance companies started passing the cost on to homeowners in higher annual premiums.
This led insurance companies to turn away customers with what were considered outdated roofs, some with years of life and durability left.
This is potentially a matter for the state legislature resolved at the May special session.
Now, homeowners can get a roof inspection if the inspector can prove there is at least five years of use left; an insurance company can’t write you off just because of your roof age.
Insurance agent Lee Wiglesworth, who serves Palm Beach County and the Treasure Coast, is seeing some insurers accept those letters to successfully appeal non-renewal letters.
However, Wiglesworth said insurers are now looking at the age of the whole house as a possible reason not to accept new customers.
That could spell trouble for thousands of domestic customers who were previously left this year and are looking for new coverage in hurricane season.
“Now that they’re not able to do that roof, we’re looking at building age, sometimes,” Wiglesworth said. “I just asked the staff what options we have for full water, full storm in Palm Beach County based on the age of the construction and they said 2010 or newer.”
For those who were not dropped by their insurance company, budgeting around a large premium increase has been challenging.
Helen Kruger of Stuart is on a fixed income. Her annual premium increased by nearly $1,800.
“Well, I was floored. I called the insurance company and asked if it could be a mistake because I had no claims. I have category 5 hurricane shutters on the house all the way, forever. They’re not going anywhere.” Kruger said.
The state’s special legislative session led to the opening of the My Safe Home Program in Florida.
If qualified, free home inspections can identify some improvements to your home. Eligible homeowners may also qualify for a grant to make wind mitigation improvements.
To potentially save on your annual premium, homeowners should also review their statement page and specifically the total home replacement cost.
Lowering this cost can lead to hundreds less in an annual premium.
Also, the initial cost of installing impact windows and garage doors will likely lead to savings for years.