Have you been abandoned by your home insurance? Here’s what you can do
If you’re a homeowner, you’ve probably struggled to find insurance at some point. Your policy may have become too expensive or you may have been let down.
Florida relied on a single company to certify insurers in the state. The states main rating agency, Demotech Inc., warned of downgrades by about two dozen insurance companies, leaving state officials to wrestle with the consequences.
Thomas Winkler, an insurance agent at A&T Insurance Brokerage in Miami Beach, helped break down the state of home insurance in Florida. Here’s what you need to know to get home insurance if you’re suddenly abandoned in the middle of a hurricane season.
Why are insureds abandoned?
Small insurance companies are going bankrupt, Winkler said. Weston of Coral Gables, which has 9,400 policies in South Florida, is the latest company to fail.
Existing companies can also increase their premiums by 10% to 30%, he said. This may be due to a bad claim experience or an inspection that revealed a problem with the home.
Almost all of those who are abandoned end up at Citizens Property Insurance Corp., a state-run company, he said. Citizens cannot compete with the private market by law, so fares must be the same or higher.
“The end result is that people have incredible increases in homeowners premium, especially on older homes and especially here in Miami Beach,” Winkler said. “It’s worse than any other place.”
Why are insurance companies closing?
The problem with insurance companies in Florida dates back to Hurricane Andrew in 1992, Winkler said. Miami has a lot of claims, some of which have nothing to do with hurricanes. But policyholders hire lawyers or public experts to get the most out of it.
“Companies end up spending a lot more on litigation than actually paying claims,” he said.
Small businesses can only work if they can reinsure most risks, like hurricanes, wildfires and other natural disasters, Winkler said. Many do not have enough capital to cover these risks and are forced to go out of business.
What should you do if you are dumped?
If you get dropped, the first thing to do is call your insurance agent, Winkler said. The agent will look into other insurers, but there’s usually no option other than Citizens.
“That’s basically what’s happening in Miami,” he said. “There is hardly any other choice.”
However, not all landlords are eligible for citizenship, Winkler said. In Miami-Dade and Monroe counties, replacement value cap is $1 million. In Broward County, it’s $700,000.
Properties that exceed those caps, he said, have more expensive insurance options.
Can you waive the insurance?
Doing nothing is an option if your mortgage is paid off, Winkler said. But if this is not the case, it is better to act quickly.
If you’re paying a mortgage and don’t purchase insurance, the bank may assign you coverage, which is usually more expensive than a regular insurance premium. This can cost double or triple a standard fare.
Is there a way to save money on a policy?
Winkler recommends everyone get a wind attenuation inspection to see if they qualify for discounts.
He also suggests that owners of older homes invest in protective features such as shutters or hurricane windows. These measures, he said, could save up to half of the premium.