Vol 7 No. 1 - September 27, 2006

Don't let insurance blues get you down
By Louise Bolger
sun staff writer

Whoever would have thought a few years ago that the endless discussions about overpriced properties and staggering tax bills would be usurped by constant talk about the rates to insure those very properties. For decades, Florida homeowners merrily rolled along never paying too much attention to their insurance premiums. Why should they? Aside from small annual increases, nothing much changed. Then came the 2004 and 2005 hurricane season and the insurance world blinked.

We have all heard the stories. Policies being cancelled, homeowners needing to go into Citizens the state run insurer of last resort, premiums increasing 100 percent and more, private insurers asking the state for permission to raise rates to unheard of levels, and all of this on top of a slow down in the real estate market. Before you decide to drive your car off a cliff or move to Boise, Idaho, there are things homeowners and citizens that can do.

First of all, calm down. Insurance premiums have always functioned under free-market principles, and there is a school of thought that the market will eventually correct itself. Of course, having a few hurricane-free years might help the market achieve this goal faster and with a lot less pain. To support this theory, it is frequently pointed out that after 9/11, insurance costs spiked nationally but eventually subsided.

Become an activist, start writing letters and e-mails to your state and federal representatives, organize friends and neighbors to do the same, and keep informed about pending legislation that could help the situation. Some legislators feel federal intervention may be necessary; others feel that property insurance has always been the responsibility of the states and should stay that way. One of the bills introduced by Sen. Bill Nelson, a former state insurance commissioner, has proposed a federal catastrophe fund to pay claims after the state catastrophe fund pays out large sums, something that residents of other states probably would not support. Naturally, vote to help make sure the candidate you feel best represents your best interests gets into office.

How about considering self-insuring, a decision that some Anna Maria Island homeowners have already made. Obviously, this is not a solution for everyone, but if you don’t have a mortgage on your home and the value of your land is far greater than the value of the structure, it could be something to think about. Of course, the replacement cost and/or repairs from a hurricane would be your responsibility, a risk that you must be willing and able to accept.

And how does this all tie into the value of your home? The only solace you may find is that people who want to live on or near the water — whether it’s Anna Maria, Fla; Charleston, S. C.; or Long Island, N.Y. — are all facing higher insurance premiums for the privilege of doing so. Just like property taxes, if you’re moving from an area with already high taxes, Florida doesn’t look bad at all.

So brace yourself when the insurance bill arrives, but instead of feeling helpless, be proactive. It may not change the numbers at the bottom of the bill, but it will make you feel better and keep you from moving to Idaho.

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