Florida’s homeowners insurance crisis could get worse as more businesses are downgraded

Florida’s homeowners insurance crisis could get worse as more businesses are downgraded

WEST PALM BEACH, Fla. — Little has changed since the Florida state legislature in May in reducing homeowners’ insurance premiums.

Since January, up to 400,000 Florida homeowners have been fired by their insurance carrier or have received letters without an extension.

In addition, 275,000 homeowners had to find a new insurance carrier because their businesses went bankrupt and could not pay their debts.

This week, the Insurance Information Institute announced that 27 more companies will have their rating downgraded by Demotech, the organization that rates insurance companies.

SPECIAL COVER: Protection of Paradise

This could unveil more companies on the brink of bankruptcy, contributing to what is being dubbed the Florida homeowners insurance crisis.

Stuart resident Helen Kruger speaks about the rise in home insurance costs

WPTV

Helen Kruger, of Stuart, Fla., said she was “overwhelmed” by the increase in her home insurance costs this year and even called her provider to see if it was a mistake.

The Insurance Information Institute reports that Florida homeowners pay almost three times the national average for annual property insurance premiums.

The institute said Florida homeowners pay an average of $4,321 a year, while the national average for annual property insurance premiums is $1,544.

Reasons include rampant roof fraud, runaway litigation and rising home repair costs, according to the Insurance Information Institute.

Citizens Insurance, the government-backed insurer, is nearing one million customers. Two years ago it was half that.

Mark Friedlander of the Insurance Information Institute said the current model cannot be sustained.

“It’s literally getting worse by the day. Citizen growth is completely out of control. An insurer of last resort, a government-run insurer of last resort, should never be the primary option for homeowners to obtain coverage. Not the first and only opportunity to get coverage,” Friedlander said.

RELATED: 17 Florida homeowners insurance companies could face downgrades

Insurance companies writing policies in Florida suffered more than $1 billion in underwriting losses last year.

The Insurance Information Institute said a fraudulent roof replacement issue 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 a performance letter.

This gives the contractor all the rights to negotiate with the insurer and leaves the homeowner out of the process.

These contractors then add tens of thousands of dollars to the replacement cost of the roof.

Insurance companies try to challenge this in court, spending thousands on attorney and court fees.

This has happened so often that insurance companies have begun passing the cost on to homeowners in higher annual premiums.

This resulted in insurance companies dumping customers with roofs that were deemed to be aging, some with years of life and durability left.

That’s a matter for the state legislature, possibly resolved in the May special session.

Now homeowners can get a roof inspection if the inspector can show they can still be used for at least five years; An insurance company can’t drop you just because of your roof age.

Insurance agent Lee Wiglesworth, who serves Palm Beach County and the Treasure Coast, sees some insurers accepting these letters to successfully appeal non-renewal letters.

However, Wiglesworth said insurers are now looking at the age of the entire home as a possible reason for not accepting new customers.

That could mean problems for thousands of local customers who were dropped earlier this year and are looking for new coverage in the hurricane season.

“Now that they can’t build the roof, sometimes we see the age of the construction,” Wiglesworth said. “I was just asking the staff what options we have for full water, full hurricane in Palm Beach County based on build age and they said 2010 or newer.”

For those who haven’t been dropped by their insurance company, budgeting around a big jump in premiums has been a challenge.

Helen Kruger from Stuart has a steady income. Her annual premium increased by nearly $1,800.

“Well, I was floored. I called the insurance company and asked them if it could be a mistake because I had no claims. I have Category 5 storm shutters all around the house, permanent. They’re not going anywhere,” Kruger said.

The state special legislative session resulted in the opening of the My Safe Florida Home program.

If you are eligible, free home inspections can identify some upgrades for your home. Eligible homeowners could also qualify for a wind mitigation grant.

To potentially save on your annual premium, homeowners should also check their declaration page and especially their total home replacement cost.

Reducing these costs could result in hundreds less annual premium.

Also, the initial cost of installing impact windows and garage doors will likely translate into years of savings.

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