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Tag: home insurance

Castles in the Sand

Florida insurance nightmare grows

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

It’s like waking up from a bad dream and realizing it was only a dream and everything is just fine. However, the Florida insurance nightmare isn’t just a bad dream, it’s the new reality, and we keep taking hits.

The latest is Farmers Insurance Company pulling out of Florida, leaving 100,000 policyholders high and dry. They will no longer be writing policies for homeowners, auto and umbrella in the state. They point to storm risk and increased litigation forcing them to reimburse more funds than they feel comfortable doing, meaning they’re not making enough money selling insurance in the state of Florida.

We can’t do anything about the storms and unless Farmers is living in a different dimension, the state has always had the risk of storms. The litigation issue was addressed by the governor and Florida Legislature this past year hoping to reduce the number of lawsuits relative to claims.

As always, homeowners live in fear each renewal that their insurance will be canceled or will go up too much. You always have the option of shopping around before your next renewal in the event you do get canceled, but be careful.

Make sure the company or insurance broker you’re talking to is a real person. There is a National Association of Insurance Commissioners that can help you verify who you’re talking to. My advice, especially for homeowners who live near the water, is to try as hard as possible firstly not to get canceled and if you get an increase, bite the bullet and pay it before shopping for a lower rate.

You can make your home more insurable by changing things that will make the property less risky to insure. Fire alarms and security systems can get you several percentage points off your premium. Hurricane shutters, hurricane-proof windows and fire-resistant siding also will help.

But the elephant in the room in Florida is the age and condition of your roof. Be prepared to get a cancellation or requirement to replace the roof if it is anywhere over 25 years of age, even if there are no leaks and no claims against it. This is also true if you live in a condominium complex where the roofs are the responsibility of the association. Condo owners are getting hit all over the place with special assessments to replace roofs in order to get insurance.

Time to report the June sales statistics in Manatee County released by the Realtor Association of Sarasota and Manatee.

Single-family homes closed 17.7% more properties from last June. The median sale price was $525,000, down 4.5% from last year, and the average sale price was $678,994, down 1.7% from last year. The time to contract was 37 days compared to six days last year and the month’s supply of available properties is 2.8 months compared to 1.8 months last year.

Condos closed 12.1% more properties from last June. The median sale price was up 3.8% to $370,000, and the average sale price was up 6.6% to $471,003. The time to contract was 34 days compared to seven days last year and the month’s supply of available properties was 3.4 months compared to 1.5 months last year.

Sales are up in both areas of the residential market, keeping in mind most of these transactions were booked at least 30 days ago before the slower season really kicked in. Nevertheless, the news release from the Realtor Association states, “The residential market in Manatee County continues to thrive with strong buyer activity.”

Insurance nightmares or not, Florida is still a great state to live in. Hopefully, we’ll have a moderate storm season and improved litigation laws that will give insurers a reason to come back to Florida. That would be a happy dream

Castles in the Sand

Tallahassee finally at work

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Just when you think it’s hopeless, there is a sliver of hope. The special session of the Florida Legislature is finally getting some changes on the books related to condominium recertification and homeowner’s insurance, all in the same week.

The special session called by Gov. Ron DeSantis was originally meant to address skyrocketing property insurance rates, however, the condominium safety bill was added to the agenda at the last minute. Both subjects were addressed in bills passed by the House and the Senate and signed by the governor.

Broadly, this is the outline of the condominium recertification requirements:

  • Recertification of condos three stories or taller will be required after 30 years, or 25 years if the building is within 3 miles of the coast, and every 10 years thereafter.
  • In addition, the bill requires that condominium associations have sufficient reserves to pay for major repairs and conduct a study of the reserves every decade.
  • Also, it will require associations to provide inspection reports to owners, and if structural repairs are needed, work must begin within a year of the report. Most of the provisions in the law will take effect in 2024, giving everyone some time to prepare.

There are estimated to be more than 1.5 million condominium units in Florida operated by nearly 28,000 associations, according to a legislative analysis conducted earlier this year. Of those, more than 912,000 are older than 30 years and are home to more than 2 million residents. With only about 650 certified structural engineers in the state, this will be a problem in getting the recertification program up and running in a timely manner.

As far as the homeowner’s insurance proposals, legislators came up with several short- and long-term fixes for the insurance market. Some of the proposals are:

  • Preventing insurers from dropping or refusing to insure homes solely because of a roof’s age if the roof is less than 10 years old.
  • For roofs older than 15 years, insurers will have to allow homeowners to have an inspection of the roof’s condition before refusing coverage.
  • Legislators also placed numerous limits on the fees lawyers can collect in lawsuits against insurers. Insurers have continually blamed excessive litigation by trial lawyers and claims triggered by fraudulent roofers for driving up the costs.
  • Legislators also agreed to assign $2 billion to create a new program for reinsurance – insurance that insurers buy – and require any companies that use it to pass those savings on to homeowners.
  • Enhancing scrutiny of insurers that fail.

At this point, no one can predict if rates will go down. My fear is that stricter regulations regarding roofs and scrutiny of companies will not sit well with the insurance companies and give them a reason not to do business in Florida. They will, however, like making it more difficult for lawyers to bring lawsuits. That said, we need to start somewhere, and hopefully Florida insurance companies will decide that our state is a good place to do business with a huge pool of homeowners.

The Florida real estate market has so much going for it, it’s important to everyone to make sure our buildings are safe and our insurance is affordable.

Castles in the Sand

Florida insurance reform – not

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

At the end of March, the Florida Legislature ended its session with an April Fools’ to every homeowner in the state.

The legislators could not come to an agreement on passing insurance reform in the face of rising insurance rates and fewer companies in the state, leaving homeowners without any relief for this year.

The bill that was in play was passed by the Florida Senate, but the House leadership wouldn’t accept it. Part of the proposed legislation was a modification of the insurance deductible for roof replacements. Naturally, homeowners with older roofs would have borne the brunt of the cost. The bottom line is that homeowners all over the state are faced with increasing rates and policies dropped at renewal time.

Part of the reason for this is that insurance companies are losing money in the state. According to the Insurance Information Institute, Florida insurance companies had $1.6 billion in underwriting losses in 2020. This is in addition to the companies’ experiencing rising costs of reinsurance, as well as fraud in the roofing industry and frivolous lawsuits.

As a result, many insurance companies are not renewing policies on homes that have roofs more than 15 years old and are even being picky about what types of homes they want to cover. Homeowners’ and condominium associations are now faced with replacing roofs on older buildings and homes during a time of supply shortages, high demand and high prices.

My personal experience was a substantial reduction in my homeowner’s premium when the condominium roof on the building I live in was recently replaced. This was because the replaced roof met the Florida code for wind velocity and then some. It was nice while it lasted, but at the next renewal, the premium was increased, wiping out all of the savings from the roof replacement.

My view is that even if legislation had been passed, can you really force companies to do business in the state? Companies are going broke or making business decisions to move their businesses out of Florida. It’s a monumental problem that will require some creative thinking in Tallahassee during the next legislative session. Tort reform and other reforms that would have better control of litigation would go a long way to help insurance companies that are leaving the state to take another look.

For now, however, we’re done, and homeowners will have to just deal with double-digit increases in their homeowner’s policy at renewal, as well as the possibility of having a new roof installed so they will actually qualify for insurance. The legislature could call a special session to take another look – a very good idea – but one that is rarely done. The state saw this coming and kept kicking the can down the road, and as usual, it’s the least wealthy among us who will be hurt the most.

I wish there were more encouraging news, but there’s not. My advice is to write to your legislator, replace your roof if you’re in a position to do so and don’t shop for another insurance company. If your current company has renewed your policy, just be happy; don’t be a fool in April.