Just Ask Tim - Blog
The homeowner’s insurance market conditions in Florida are becoming exceedingly difficult for consumers, especially in zip codes more prone to hurricane damage or if you live in an older home or have an older roof. Most homeowners where shocked by last years premium increases or in some cases receiving a non-renewal notice. This year is going to be more of the same with another round of significant premium increases and more non-renewal notices. On top of that, depending on where you live, you may have very few choices as many of the insurance companies have stopped writing new business in those areas or will only write homes with newer roofs. In some cases, homeowners may have to accept less coverage to either afford the premium or possibly even get coverage.
For those homeowners with older roofs, the only option may be Citizens. However, depending on the age of the roof, Citizens will require a licensed roofer certify the number of years of life left on the roof. Citizens requires at least 3 years of life to issue the policy or renew a policy. So, if a homeowner has a roof certified this year as having 3 years of life left, then at renewal the roof will have to be replaced for Citizens to renew the policy since the roof would now be a year older and have less than 3 years of life left.
It is becoming more common for homeowners to ask us if they can lower their coverages to save money. In response, we first work to identify opportunities for discounts, only after exhausting that do, we move to presenting options for lowing coverages. The coverages we look to most often are: Increasing deductibles, Coverage C (personal contents), Coverage D (loss of use), Coverage E (personal liability), Coverage F (medical payments to others), removing mold and/or sewer back up coverage, and removing coverage for screen enclosures. In extreme cases we may present the option for changing the roof coverage from replacement cost to actual cash value and/or changing coverage forms all together.
We do not recommend homeowners increase their financial exposure by lowering coverage. That said, we believe we are obligated to present the options, explain the financial exposure they are taking, and then let the homeowner make the final decision. We understand the current homeowner’s insurance market conditions are forcing some homeowners to choose between taking on more risk to afford the premium or not being able to have insurance at all.
These are trying times that are frustrating homeowners that have paid their premiums for years and never turned in a claim. Hopefully, the Florida legislature will pass legislation this year that will ease some of these issues. We will keep you updated.
Text or call us at (954) 678-2658 or email us at firstname.lastname@example.org and we will help you walk through the options you have so you can make an informed decision.
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Part 1 – water entering your home from outside
Many homeowners are frustrated when they submit a water related claim to their homeowner’s insurance company and the insurance company denies the claim by saying the policy does not cover flood which is true. That said, many homeowners are confused about what defines a flood. Before turning a water claim into your homeowner’s insurance company ask yourself the following question: did the water come into my home from outside the house or from inside the house? If you answer from outside the house, then that will most likely be considered flood and not covered.
You might be saying….wait a minute, I do not live near a lake, stream or canal so how can there be a flood in my location? A flood is the result of rising waters. So, let us say there is heavy rain for a few days and the storm drains can no longer accept the runoff. You may even see water coming up out of the storm drains. This results in the water rising to a point it enters your home. That is rising water that enters your home from outside which is also called a flood. Another example might be there is a pump station that serves your neighbor hood to make sure when heavy rains come the water is pumped out before it rises. What if that pump fails? Then the water will rise and enter your home from outside again resulting in a flood.
Approximately 1/3 of FEMA flood claims occur outside designated flood zones. So, just because you are not in a FEMA designated 100-year flood zone does not mean you will not be the victim of flood damage. Additionally, approximately 4 out of every 10 flood policies written in the United States are in Florida. Florida also has the lowest average flood policy premiums in the United States.
Do you have a flood policy? If not, text or call us at (954) 678-2658 or email us at email@example.com. You may be surprised just how low the premium is.
Part 2 – water entering your home from inside your house
For the most part, water damaged caused by water from inside your home is covered by your homeowner’s insurance policy. For example: a busted washing machine house or leaky water valve under the sink. So long as the water entering your home for inside the house is not due to poor maintenance you should be covered by your homeowner’s insurance policy. However, there is one exception. When water enters your home from inside the house due to sewer backup then that is not covered. For example, let us say you have water coming into the home from your shower or tub drain. This would be considered sewer backup and not covered. ( makes sense since the water is originating outside of your home )
Do not worry, for a small additional premium you can add this coverage to your homeowner’s insurance policy by endorsement. We add this to every homeowner’s insurance policy quote we provide unless the homeowner asks us to take it off.
Has sewer backup coverage been added to your homeowner’s insurance policy? Just pull out your policy and it will be listed towards the front where all your endorsements are listed. Unsure, text or call us at (954) 678-2658 or email us at firstname.lastname@example.org and we will help you determine if you have this coverage or not.
The Federal Emergency Management Agency (FEMA) has released an update on Risk Rating 2.0, a new flood-insurance rating system that is expected to be implemented in phases this year and into next year. The new rating system replaces the current approach, which has been in place since the 1970s, of placing homes either in or out of the “100-year” floodplain and instead uses new modeling and data to establish the size of the risk for each individual property based on a range of factors.
The purpose of this change is to provide more actuarial sound rates for the risk taken. This has been in the works for some time now and is expected to take effect in October 2021. What will this mean to individuals currently insured with the national flood insurance program? The short answer is it depends on many factors. We will not know for sure until the national flood insurance program releases their new rates. However, we can speculate that since this new methodology is designed to provide rates more closely aligned with risk then those areas that are believed to be under priced will see rate increases. The following states lead the list of potential rate increases; Florida, New Jersey, South Carolina, parts of Texas, parts of Washington state, and parts of California. The good news is the national flood insurance program is capped on how much of an increase it can take. The bad news is that cap is more than $4,000. So, the impact could be significant for those who see their national flood insurance premiums go up.
Regardless of where you live, if you currently have a national flood insurance policy you should consult with your licensed independent agent to see if you might be effected and to stay updated as we get closer to when the new rates will take effect. If you live in Florida, you can always reach out to us for information by texting or calling us at (954) 678-2658 or by email at email@example.com.
We cannot imagine there is a Florida homeowner that has not experienced the significant increase in homeowner insurance and condominium insurance premiums. Many believe these rate increases are the result of weather and hurricanes, but in the primary driver has been the increase in legal actions brought against insurance companies on behalf of homeowners. Some would say third party adjusters, roofing companies and law firms have been abusing the law while others would say the insurance companies are not paying claims fairly and yet others will say homeowners are taking advantage of the system. Regardless of the cause, (we are in no way attempting to assign blame to any party or parties) Florida homeowners are finding it difficult to afford or simply get homeowners insurance in the traditional admitted market. In 2020 alone, Citizens which is the insurance company of last resort for Florida, grew by more than 23% and added over 100,000 policies.
The purpose of Senate Bill 76 (SB 76) is to resolve some of the issues that the legislature believes is driving the increase in homeowner’s insurance and condominium insurance premiums. You can read the full bill by clicking HERE.
The following is a summary of the bill from our perspective. We are not attorneys nor are we attempting to provide a legal review or advice. This is simply our opinion after reading the bill. We strongly encourage you to read the entire bill yourself and consult a Florida licensed attorney or your state representative with any questions you might have.
Claim Notice Requirements
Today, an insured in Florida is not required to provide notice of a claim and can file a lawsuit anytime within five years from the date of loss, except when the loss is the result of a hurricane or windstorm in which case the insured has three years to submit the loss or file a lawsuit.
The bill adjusts that to require claims to be submitted within two years from the date of loss, regardless of the type of claim.
The bill also adds a new notice type. Before filing a lawsuit, the insured must first send the insurance company notice and give the insurance company 60-days to resolve the issue. At the end of the 60-day period the insured can still file a lawsuit if they are not satisfied.
Calculation of Attorney Fees
Today an attorney can request a “fee multiplier” based on attorney’s believe the insured would have had difficulty finding a law firm or attorney to take their case and convince the judge to award them a fee multiplier. These multipliers can be large with many reaching two and three times. So, if the law firm spent $50,000 dollars litigating the claim and they were awarded a 2 times multiplier by the judge then they would receive $100,000 rather than the $50,000 the law firm spent. This goes to the law firm and not the insured.
The bill places a burden on the attorney or law firm to establish that competent counsel could not be retained by the claimant in a reasonable manner. Today the attorney or law firm simply has to claim that to be the case.
The bill also changes how attorney fees are recovered. The new method is based on the final judgement amount. If the judgement is greater than or equal to 80% of the original demand, then 100% of the attorney fees can be recovered. If the judgement is less than 80% but greater than or equal to 20% then the attorney fees will be received based on that percentage. For example, if the demand were $100,000 and the final judgement was $50,000 then 50% of the attorney fees could be recovered. If the judgement is less than 20% of the demand, then 0% of the attorney fees are recoverable.
Roof Replacement Cost Reimbursement
Today, insurance companies must offer Florida homeowners replacement cost coverage for their roof. The insured can purchase actual cash value coverage for their roof, but this is optional and must be requested by the insured.
The bill would allow insurance companies to move from replacement cost coverage to a reimbursement based on the age of the roof. If the roof is no more than 10 years old, then the reimbursement would be 100% of the cost to replace or repair the roof. If the roof is more than 10 years old, then the insurance company can provide a schedule based, on the age of the roof, that sets the percentage of the cost to replace the roof the insured will be reimbursed. As an example, an insurance company might set the schedule to reduce from 100% at a set percentage point for each additional year of the roof. For example, let us say the insurance company says they will reduce the percentage of the total cost to replace the roof by 3 percentage points per year after the roof reaches 11 years old. So, if the roof were 15 years old then the 100% reimbursement would be reduced by 15 percentage points or would now reimburse the insured for 85% of the cost to replace the roof. Regardless of how the insurance company builds the schedule, the bill sets certain minimum reimbursement percentages that varies by roof type.
Replacement cost reimbursement can still be offered by the insurance companies, but it would no longer be a requirement.
Where Does This All Stand?
SB 76 was passed by the Florida Senate on April 7th, 2021. It will now head over to the Florida House for further debate. As with any bill, this back and forth between the Senate and the House can happen many times before both chambers agree and send it to the Governor for signature. That said, if the bill is not approved by both chambers before April 30th, 2021 then the bill dies. It will have to begin the entire process from the beginning during the next legislative session which is in 2022 unless the Governor were to call a special session.
Even if the bill were signed into law this year, it would not affect this year’s insurance premiums. So, we encourage you to have a Florida licensed agent shop the insurance market for you to be sure you are getting the best insurance option for your situation.
We can leverage our technology to shop multiple insurance companies in a matter of minutes. Text or call us at (954) 678-2658, email us at firstname.lastname@example.org or submit a request for one of our agents to contact you by clicking Get A Quote.
Home insurance, also commonly called hazard insurance or homeowner's insurance (and often abbreviated in the US real estate industry as HO1), is a type of property insurance that covers a private residence.
It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one's home, its contents, loss of use (additional living expenses), or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.
Section I — Property Coverages
We work with homeowners every day to help them get the right coverage at the best price possible. Text or call us at (954) 678-2658 or email us at email@example.com and we'll be more than happy to help you.
Citizens Insurance, regardless of need to increase prices, cannot increase their rates more than 10% per year by Florida law. This was done to maintain a reasonably priced choice for home insurance buyers when they could not find an alternative in the traditional insurance market. However, over the past few years many things have changed.
First, in 2020 reinsurance rates have dramatically increased. This is the insurance that insurance companies buy. So, the traditional market was forced to pass these rate increases on to their customers. This is one of the reasons home insurance rates in Florida have been increasing by double digits this year. Many companies increased their rates from 15% to 40% to compensate for the cost of reinsurance.
Second, in 2021 reinsurance rates are expected to increase again. We will not know the extend of these increases until late May, but the expectation is for another set of double digit increases in 2021. That means consumers could see their home insurance rates increase by 60% or more over a two-year period.
Third, home insurance rates increased approximately 20% from 2016 to 2019 in response to hurricanes Matthew and Irma. Put this on top of what was discussed below, and it is easy to see why homeowners are screaming about their home insurance rates more than doubling over the past four years.
So, what does all this have to do with Citizens Insurance? Since Citizens Insurance is limited to no more than a 10% increase per year their rates have fallen way behind the traditional market. This is leading to their market share to increase at an alarming rate and at premiums well under what is needed to be profitable. MOST HOMEOWNERS DO NOT KNOW THAT IF CITIZENS CANNOT PAY LOSSES, THEY ARE ALLOWED BY THE STATE TO ASSESS FLORIDA HOMEOWNERS TO MAKE UP THE DIFFERENCE!
State lawmakers are overly concerned. A proposal is being presented to the Citizens’ Board of Governors to discuss a proposal to adjust the law so that Citizens can increase rates to a more profitable level and to slow the rate at which homeowners are moving from the traditional insurance companies to Citizens.
If the proposal were accepted and the law changed, then Citizens could increase their rates by more than 10% in 2021. How much they would increase is unknown, but they have a long way to go if they want to be adequately priced and not the most competitive price in the market.
Stay tuned, we will keep you updated. You can always call us at (954) 678-2658 or visit us at www.JustAskTIM.com
From 2017 to 2019 the Florida domestic home insurance companies have taken premium increases every year. The cumulative impact of these increases is staggering. If you were paying $2,000 per year for home insurance in 2017 it would not be unusual for you to have paid $2,600 for that same policy in 2019. But wait, in 2020 all the Florida domestic home insurance companies have been increasing premiums from 15% to as much as 40%. That means the $2,600 premium in 2019 would rise to as much as $3,600 in 2020.
When loan officers are qualifying a home buyer for a mortgage amount one of the components is the cost of home insurance. However, in almost every instance this year we see loan officers using outdated values when they are estimating the cost of insurance. If a loan officer were to use the $2,600 value from last year but the actual cost this year comes in at $3,600, you just added $83 per month to the estimated house payment. Additionally, home buyers are waiting until late in the process to shop for insurance. What they find is there are fewer insurance companies writing new business in South Florida and those that are have significantly increased premiums and added restrictions. For example, many of the remaining insurance companies writing new business in South Florida will not issue a policy on a home built before 2002 and with a replacement cost value less than $350,000. Many will not take a flat roof more than 10 years old or a title roof more than 20 years old. Others have added restrictions based on the age of the air conditioning, water heater, and the plumbing.
We recommend that once you have identified a home you want to purchase you call an independent agent to get a free estimate on what the insurance cost will be. This will give you an early indication of what insurance will cost or if you cannot secure insurance for the property based on age or other underwriting criteria. Additionally, you should consult with your real estate agent about the opportunity to write a clause allowing you to cancel the purchase contract if you cannot secure home insurance at an affordable price.
Teal Insurance Management specializes in home insurance and is located in South Florida. You can request a no obligation free quote by Clicking Here. You can also give us a call at (954) 678-2658 or email us at service@JustAskTIM.com.
As the home insurance market continues to get more restrictive and insurance companies continue to increase premiums, we are frequently being asked what can be done to lower the cost of my home insurance. This is a difficult question that begins with a review of your current coverages. Click Here to request a no obligation policy review. It is important to find a balance between affordability and adequate coverage, but here are some options to consider when trying to lower the cost of your home insurance.
We started this article with the statement we recommend our clients buy adequate insurance for the risk they have. However, in some cases clients will tell us they cannot afford to pay the premiums and need to lower their insurance coverage. This is not something we recommend, but we are here to serve our clients so if requested we will look at the following for opportunities.
There are other coverage opportunities that include mold, fungi, bacteria, sewer backup and ordinance or law. We can work with you on each of these to see if there is an opportunity to lower your premium by adjusting one or all of these. We just did an article about ordinance or law coverage, Click Here to open that article
If you are serious about looking for ways to lower your home insurance premium, we recommend you request an independent agent do a policy review. You can request one from us by Clicking Here. We begin by asking you to forward a copy of your current coverage page, also know as your declarations page, from your policy. We will then review the coverages you have and email you with questions. You can also call us at (954) 678-2658 or send us an email at firstname.lastname@example.org.
Anyone who remembers Hurricane Andrew will never forget the level of destruction that storm caused. It also changed the Florida insurance marketplace forever. Because Floridians found it difficult to secure home insurance post Andrew, the State of Florida created the Florida Windstorm Underwriting Association and the Florida Residential Property and Casualty Joint Underwriting Association. The entities were created to provide home insurance to Floridians- who could not obtain home insurance in the private market. It took almost a decade before private insurance companies started to increase capacity. As the market began to improve, in 2002 the State of Florida merged these two state entities into Citizens Property Insurance Corporation of Florida.
Citizens had a simple purpose; 1) to provide qualifying Floridians home insurance coverage that could not find home insurance in the private market and 2) assure there is a path for these insureds to get back to the private market at some point in the future. Almost 20 years later, these are still the objectives of Citizens. There are many who believe Citizens is the insurance company of last resort. To some extent that is true, but Citizens will not take all homes. Like the private market they have restriction. Additionally, Citizens does not provide the same level of coverage available in the private market and your ability to customize coverage is also limited. Lastly, Citizens introduced the clearing house a few years ago and instituted a further restriction based on price. The rule is simple, if you can qualify for private market insurance you cannot be written by Citizens unless that private market policy premium is 15% or more higher than the Citizens premium.
Why are we choosing to write about this now? Because in the past year South Florida (Palm Beach, Broward, and Miami-Dade counties) have seen a significant increase in the number of private market insurance companies that will not accept new business. Many of those that are still writing new business have restrictions on the age of the home, the value of the home, and the condition of the home. Additionally, for the third year in a row the private market has continued to increase premiums in some cases more than 20%.
This has increased the number of Floridians receiving home insurance quotes from Citizens. It is our thought that Floridians need to be aware of the purpose Citizens serves, that the coverages are not the same, there are limits to coverage customization, and unfortunately the customer service and claims experience are not that great to say the least. We would advise Floridians to consider that even if a private market policy is 15% higher than Citizens you should consider staying in the private market if you can.
To learn more or ask questions give us a call at (954) 678-2658 or email us at email@example.com
It's always a good idea to begin preparing for Hurricane Season in early May each year. The season begins in June, so that gives you a month to get ready. We recommend you being with having a prep-list to work from. This will help organize your preparation to avoid missing import items or steps. A good start is to American Red Cross hurricane safety check list. Click Here to get the list from their site.
It's also important to keep up to date on hurricane activity and forecasts. A good place to start is the NOAA hurricane center. You can visit the forecast map by clicking this link NOAA FORECAST MAP. You can also see the names NOAA will be using for this year's storms. They can be kinda funny, so be sure to take a moment to check them out. You can view the Atlantic region 2020 storm name list by following this link STORM NAMES.
We cannot stress enough the importance of being prepared and having an evacuation plan. If you need a review of your home insurance policy to make sure you have the right coverage, feel free to give us a call at (954) 678-2658 or Click Here to request a review.