Never-ending insurance issues
Look around your house, check the corners and the garage and even under the beds, and I guarantee you that eventually you’ll find it. Find what? The property insurance elephant that is always in the room of every Florida house. And even though there has been a rate freeze on premium increases on Citizens Insurance policies, the elephant in the room has been there waiting all along for the freeze to thaw, and that day is fast approaching.
In 2007, Gov. Charlie Crist and state lawmakers imposed a freeze on rates expiring Jan. 1, 2010. At that point, Citizens Insurance, the state run company, is supposed to start charging actuarially sound rates. However, actuarially sound rates would mean an average rate increase of 47.7 percent statewide in 2010. Crist and Florida lawmakers decided that was far too steep and imposed an annual 10 percent cap on increases in an effort to shore up Citizens’ reserves on a gradual incline.
Essentially, what this means is that for the next five years, Florida policyholders can anticipate a 10 percent annual increase in their Citizens’ homeowners policies. This could almost double their rates during the 5 year period considering the 10 percent annual increase will be compounded. Of course, this will only work if Florida does not have a major hurricane before the reserves are brought up to their actuarially sound level. If we experience a severe storm prior to that time, not only is the state on the hook for the additional funds, it could also assess other insurance policies in the state to cover its losses.
In addition, based on actuarial analysis from Citizens, there are some Citizens’ policyholders who may have been paying more than the computer modeled rates call for. Citizens has not yet determined how much this means in rate cuts and how many policy holders are involved, but if you feel you may have been overpaying, get in touch with your insurance broker or Citizens’ representative.
Now that I put you in a really bad mood, there are a few things you can do to reduce your homeowner’s insurance premiums whether you have a Citizens’ policy or are insured with a private company.
The most effective thing that will not only lower premiums but also protect your home and possessions is to install hurricane shutters or impact resistant glass on all openings of the home – windows, doors, garage doors. Citizens already requires single family homes with a replacement cost of $750,000 or more to hurricane proof the home’s openings before its policies will be renewed.
Central burglar and fire alarms will reduce your premiums, as well as updating the home’s electrical, plumbing and other systems. Also, if your insurance is with a private company, ask about combining home, auto and umbrella policies that may offer a discount to keep all policies in one company.
The elephant in the room in Florida is homeowners insurance, everyone wants to ignore it, but it just takes up residence and can’t be moved. The good news is that it’s OK if the elephant happens to be pink, it blends in with the flamingos on the front lawn and gives you an excuse to run to the bar after opening your insurance bill.
