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 However, in almost every instance this year we see loan officers using outdated values when they are estimating the cost of insurance.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.

• Hurricane Mitigation – this is where your home is hardened against the destructive forces of a tropical storm or hurricane.  Most commonly this includes having hurricane rated entry doors and garage door in addition to have all window and sliding glass door openings protected by panels, shutters or impact glass.  If your home already has these hurricane mitigation features, then congratulations because insurance companies provide a measurable premium discount. If you do not, then this is an something you should consider to reduce your home insurance premium.  We frequently find the problem for most of our clients is the cost of doing this is expensive and it can take 3 or more years to recover the cost in saved premiums. So, we always recommend taking this step if you cannot afford the investment.
• Shopping – home insurance premiums vary by insurance company. So, asking your independent agent to shop the market each year to be sure you are paying the lowest home insurance premium available for your coverage level is always a wise choice.  At Teal Insurance Management we do this each year without being asked.
• Deductibles – this is where you choose to increase the portion of any claim you will pay out of your own pocket. For example, if you had a $2,500 deductible and you had a $50,000 claim you would pay $2,500 and the insurance company would pay $47,500. The premium discount for increasing your deductible varies by insurance company, so again you’ll need to ask your agent to shop the market to find the company that gives the largest premium discount for taking a greater share of the cost for each claim. We recently posted an article about deductibles, Click Here to open that article.

 
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.

• Coverage A or Dwelling Coverage - Florida insurance companies for the most part require a home to be insured to its’ replacement cost value. Each company has a program that will look at the features of a home and determine what it would cost to rebuild (excluding the cost of the land). This is the value the insurance company will require the home be insured for.  We will not under insure a home.  Why?  Because if your home is damaged or destroyed and the dwelling coverage is not enough to cover the cost of repair or rebuild, you are on the hook for the remainder. So, if the estimated cost to rebuild is $300,000 and you insure your home for $250,000 you would have to come up with the remaining $50,000.  In addition to the insurance company and ourselves, mortgage companies also require the home be insured to the estimated replacement cost value. In some cases, they even ask us for the replacement cost estimate worksheet to assure the features of the home were input correctly.
• Coverage B or Other Structures – this coverage is for structures not attached to your home. For example, a utility shed.  When clients come to us, we frequently find this coverage on many home insurance policies but when we do a satellite view of the home, we do not see any detached structures. Sometimes we will find a shed or other small structure, but the coverage for other structures is set at $10,000. That is a really nice shed!  This is an area we frequently find an opportunity to adjust coverage levels. However, the savings for this adjustment is not large. Every little bit adds up though.
• Coverage C or Personal Property – this coverage is for your personal items. For example, clothing, furniture, electronics, and rugs.  There are really two parts to this coverage. First is the amount of coverage and second is if you have chosen to be covered for the actual cash value of the items or the cost to replace it.  The first step is to decide if you want the actual cash value or replacement cost of your items. We did an article explaining the difference, Click Here to open that article. In the end, it comes down to being paid the “used” value of your items or the cost to buy a brand-new replacement at the store.  The next step is to determine the amount of coverage you would need for your items based on the choice of actual cash value or replacement cost.  The coverage amount is based on a percentage of the Coverage A limit. We frequently see clients come to us with coverage set at 50% of Coverage A and paid on an actual cash value basis.  When you think about it this is not the right way to do it, here is why. If my home is insured for $300,000, I have personal property coverage set at 50% which would be $150,000 and actual cash value as the settlement option then that would mean the used value of my personal items would need to add up to $150,000.  That is why we work with our clients to first determine how they want to be paid and then decide on the amount of coverage they need.  When looking to save on your home insurance premiums actual cash value will always be less expensive but remember you will not get enough money to go out and buy brand new items with this type of coverage.  We find Coverage C to be the best opportunity for clients to lower their home insurance premiums. Work with your independent agent to figure out the best coverage for you and then shop the market to find the best premium available.
• Coverage D or Loss of Use – this coverage pays the cost of you incur when you lose the use of your home due to a coverage loss.  This not only includes lodging but also other items like clothes and meals.  You will need to think about what it would cost you to live somewhere else. We recommend you consider the cost to live somewhere else for up to a year.  Once you evaluate your current level of coverage you may find you have purchased to much which would be an opportunity for savings when you lower the coverage.
• Coverage E or Liability – this is coverage that protects you when someone sues you for something you did or failed to do.  Most insurance companies’ lowest available coverage level is $100,000. As with loss of use, you will need to consider what exposures you have and how much coverage you need. We recommend $100,000.

 
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 service@justasktim.com.

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 service@justasktim.com