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Keeping a roof over our heads isn’t as simple as it used to be and it’s certainly getting more expensive by the day. We’re all experiencing the same frustration and it’s worth asking ourselves why, and if there is anything to be done about it. Florida’s tumultuous property insurance market amounts to nothing less than a perfect storm according to lawmakers.  We will attempt to summarize the circumstances that have created this unusually tough situation and why as homeowners we are experiencing higher than average premiums.

WHY INSURANCE PREMIUMS CONTINUE TO RISE

There’s no one answer. In recent years homeowner insurance carriers have often been seen as the reason for these escalating premiums – not entirely accurate nor a fair assumption to make, as it turns out. According to lawmakers and business leaders there are several factors contributing to this volatility and higher than average premiums: fraudulent claims are on the increase, as well as frivolous lawsuits that result in rising reinsurance costs. The cost to defend frivolous lawsuits brought on by public adjusters, fraudsters, and attorneys seeking to inflate settlements and fees has dramatically impacted the cost of doing business and the cost of purchasing reinsurance for carriers to cover claims in Florida has almost doubled.   Add the frequency of severe weather in the Southeast on top of this and you can see why things are out of whack. These costs are ultimately passed on to all Florida residents by insurance carriers throughout the State.

Most carriers offering homeowners’ coverage in Florida sought rate increases from 12% to 32% in 2019 and 2020, all in an effort to offset these costs. As a rule, policyholders see rates increase on all policies, regardless of prior claims history. Those carriers who did not seek rate increases, stopped offering coverage all together – preferring to “wait and see” until the Florida homeowner’s insurance market stabilized, or until legislations to curb attorney fees and lawsuits is filed and passed. This makes it difficult for your agent to shop your policy, as other carriers may not be offering coverage in your area. Complicated to say the least.

Whatever, the reason, one thing is crystal clear. Floridians are experiencing sky rocketing rates and a parade of companies dropping policies or going out of business entirely leaving some homeowners scrambling for coverage..  An expert on insurance and risk management at Florida State University was quoted as saying: – “You can’t look at the state of the private insurance market in Florida and say it’s good. It’s an extremely fragile market at the moment and with hurricane season approaching this could cause real problems and be even more worrisome”

In an attempt to stabilize this troubled property insurance market, lawmakers, headed by the Governor, intend to push to adopt a measure similar to a Texas Law. To combat fraudulent claims and frivolous lawsuits they would like to adopt a measure that allows for “reasonable and necessary” attorney fees, based on a prescribed formula rather than the current system, where fees often outstrip the cost of a claim. On the table could be even higher costs for homeowners through a new deductible for roof damage claims; changes to how much lawyers can collect in fees when fighting insurers; and a reworking of Citizens Property Insurance, the state-backed insurer of last resort for 850,000 Floridians, and whose numbers are expected to top 1 million soon.  Not a pretty picture.

IS THERE ANYTHING YOU AND I CAN DO TO LOWER OUR PREMIUMS?

Yes, there are a few things that we as homeowners/policy holders can do to lower our premiums without waiting for new legislation to take effect:

  • Paying a higher deductible can certainly reduce premiums. Policies with high deductibles equate to lower premiums, which is a benefit over the years. 
  • Installing hurricane resistance doors and windows will further reduce the cost. Don’t forget the garage.
  • Ensuring that any roof wear and tear is taken care of before it becomes an issue will be looked upon favorably by your carrier
  • And, like every aspect of life “the squeaky wheel gets the oil.”   Make your voice heard through local state legislators. Your agent will guide you on this process.

Someday …. maybe …. property insurance will get cheaper, and rates will return to the levels we’ve seen in the past. If, and when, that happens let’s all raise the roof!

 Your Team at Liberty Title Company of America