Homeowners hit with higher insurance premiums
http://www.sun-sentinel.com/business/fl-florida-insurance-rate-hikes-20100709,0,6972239.story
Warren Kurtzman was elated when Gov. Charlie Crist vetoed legislation last month that would have made it easier for insurers to raise property insurance premiums.
That’s why it came as a shock when his insurer, HomeWise Insurance, informed Kurtzman two weeks later that the premium on his Delray Beach condominium unit is increasing by 42 percent – from $609 to $864 – this year.
“I thought [the veto] was the greatest thing in the world,” Kurtzman said, “and all of the sudden, I get this [notice] and I almost choked!”
Despite Crist’s veto, and four relatively quiet hurricane seasons, thousands of Florida residents are experiencing similar rate hikes this year. The reason: Crist’s veto doesn’t end rate increases – they’re still allowed for some reasons, with state approval.
In the past 12 months, the Office of Insurance Regulation approved about 140 residential insurance rate hikes, ranging from less than 1 percent to 29 percent. Some individual policy holders’ bills went up more because the approved rate increase is a statewide average.
The increases were approved after many insurers argued that efforts made by the state Legislature to cut premiums in 2007 and 2008 had left them unable to keep pace with claims and other costs. Lawmakers were pressed to act after policyholders experienced huge increases in premiums – doubling and tripling in some cases – after Hurricane Wilma in 2005 and other storms.
Last year, Crist signed legislation that made it easier for insurers to boost premiums as much as 10 percent annually to pay for certain backup coverage costs. About 22 of the 140 increases were filed under that law.
Regulators say there are deeper problems with the property insurance market, including the development boom during the past few decades and, in turn, an increase in the possible damage that could result from a major hurricane.
As homeowners’ policies come up for renewal, they are learning that their rates are rising. Some say they feel helpless dealing with their property insurance, which is required by most lenders.
Karen Leshin, of Weston, said her State Farm property insurance premium increased 60 percent, from $3,198 last year to $5,110 this year. “How is it possible?” she said. “We’re kind of caught between a rock and a hard place.”
Leshin said she wants to move out of Florida due in part to the cost of insurance. But like many other Floridians, her home isn’t worth close to what it was when she and her husband, a retired airline pilot, bought it. She said they have bought State Farm policies to insure their home and cars since 1971. Before paying the higher premium, she said she tried shopping around but found other insurers charging about the same.
“I guess they all got the memo,” she said.
Kurtzman said he plans to shop around. He said he can’t afford a dramatic rate hike because he’s on a fixed income after retiring from a career in finance: “I’m getting killed in the stock market.”
Sylvia Dow, a retired communications worker, said her insurer, Southern Fidelity Insurance, increased the premium on her Margate home by 36 percent from $2,010 to $2,729 this year.
“It was quite a shocker, but we have to deal with it because we have to have insurance,” she said.
Dow said she was surprised when Allstate dropped her coverage in 2007 because she doesn’t live near the coast and she hasn’t filed a claim in the 20 years that Allstate covered her home and car.
Major national insurers such as Allstate and Nationwide dropped policies after the 2004 and 2005 hurricanes. State Farm, the state’s largest property insurer, faced some unique challenges.
The company announced its plan to leave Florida’s property insurance market early last year after the state rejected its request for an average rate hike of up to 67 percent.
Months later, the state Legislature approved a sweeping measure to deregulate insurance rates, hoping it would help the state keep companies like State Farm in Florida, but the bill was vetoed by Crist.
But Deputy Insurance Commissioner Belinda Miller said State Farm’s low rates were its own doing: Unlike other insurers, the company offered voluntary discounts, not required by the state, for years.
“That was not rate suppression. That was a company doing in Florida exactly what it’s doing in other states,” Miller said. “They put us through hell over the 67 percent rate increase when in fact at least half of that was self-inflicted.”
Eliminating the discounts translated to a statewide average rate hike last year of 28 percent for State Farm, regulators estimated. State Farm struck a deal with regulators to stay in Florida but to drop 125,000 policies and increase rates by another 14 percent, on a statewide average basis.
Miller said Florida’s problem stems from its growth in development in recent decades, which means there’s more potential damage from hurricanes. At the same time, insurancen companies have less appetite to cover catastrophies; they’d rather sell other, more profitable types of insurance, such as autos and other vehicles.
“It’s not that we have more hurricanes. The problem is we’re building more in their path,” Miller said.
In addition, some lawmakers and regulators argue that it’s unclear just how bad insurers’ financial health is; many pay fees to affiliate companies to manage parts of their business. Unlike the insurers, their affiliates aren’t subject to regulatory restrictions on profit and dividends, and they aren’t required under state law to file audited financial statements.
“It seems like there’s a big loophole there,” said Chris Cury. Cury is a real estate developer who recently got his license to become a public insurance adjustor.
State Farm increased the premium on Cury’s home in Plantation from $2,500 to $4,200 – 68 percent. “I didn’t understand it because there hadn’t been hurricanes in several years,” he said. “I’m in the real estate business, so it hit me hard.”
Gail Bierworth, of Lighthouse Point, said State Farm increased her homeowner insurance premium 83 percent, from $3,395 to $6,214, even though her home was completed in 2005 and has hurricane impact windows and other features fortifying it against storms. She said State Farm covers her home and car. She’s purchased her homeowners insurance from the company for 20 years – and never filed a claim.
“I can’t believe that a company can raise the premium 83 percent in one year. This seems to me to be most unconscionable, especially at this time of our uncertain economy,” she said before calling state officials to complain. State officials, she said later, weren’t very helpful.
She ultimately she lowered her coverage dramatically – from $698,600 to $390,000 – to bring the premium near last year’s, $3,420. “That was the lowest they’d be able to lower my coverage,” she said. “It’s probably on the low side…but I’m comfortable with it.”
Posted by Bill Siegel Florida Home Inspection Team Inc
windstorm mitigation
In about 60 days a new windstorm mitigation form will be coming out. It is a much more difficult form than the one now being used. It was designed by the insurance compnaies and its purpose is to try and limit the amount of discounts that the homeowner will be able to receive. All current homeowners need to brace themselves, as most of the inspections that have already been completed are going to be audited. A lot of you will see increased in your insurance. You will also now need proof of permits to show when your roof and shutters were installed and will possible have to show proof of the dade county approval.
Wind mitigation inspections
The entire house had hurricane shutters installed in 2007. The cabana door was left unprotected. Because of this one door, the homeowner will lose all the credits for shutter protection. I cannot understand why they did not protect this door.
Posted by Bill Siegel Florida Home Inspection Team Inc.
How long should a Home Inspection take
Usually when you ask a Home Inspector how long it will take to conduct a home inspection your will receive a standard answer – 2.5 to 3 hours. This is for a home up to 2000 square feet. But how long does it really take YOUR inspector. I was in a home last Friday. I spent an hour outside the house doing the roof, exterior, foundation, grading, condenser unit, incoming electrical, and utility room. After being inside for 15 minutes the Realtor asks me how much longer before i am finished. I told him between an hour and an hour and a half (actually finished in an hour and fifteen minutes from his question). He looked at me and the buyer and stated that he had to leave, he could not wait that long. He made the comment that most inspectors finish in under an hour.
Whether you are a First Time Home Buyer or not, do not be short changed by your inspection company. Anyone who completes your inspection in an hour is not doing you justice. You are paying for a product. Just like anything else, if you do not believe that it lives up to the quality you expect, then do not pay for it and hire another inspection company. This is one of the reasons that it is important to ask before hand how long the inspection will take. Not only are you given a price based on that particular home, but you also have a time added value as to how long it should take to complete.
I have heard numerous times that a client shows up for an inspection and the inspector says he got there early and is just finishing up. How do you know what he did. Did he walk your roof, look in the attic, or take off your electrical panel cover? These are all things you, as a buyer, need to be checking for. An inspection is for your protection and possibly help you negotiate a better deal, or walk away from the deal. An inspector who does not give you the time and effort that you require doe not do you an justice. This hold true not only for home inspections, but also for wind mitigation inspections and 4-point insurance inspections.
Posted by Bill Siegel Florida Home Inspection Team Inc
Wind mitigation Inspection
Well, it happened to me again yesterday. Had an inspection in Pompano and the client decided to use me for the home inspection and another inspector for the wind mitigation because he was charging less. He comes in, does his inspection and tells the client that the roof meets the newer codes and that the roof to wall connections are strapped. I had already previously been in the attic and knew that there were not straps. This house does not even have clips. It is toe nailed, which is the weakest form of attachment.
The client will receive an unwarranted discount on his insurance and only get caught if the insurance company conducts an audit on this home. Then he will be asked to pay the premium difference. Or if we have a hurricane and there is roof damage, he may have trouble collecting his insurance due to a fraudulent report. We need to do something to get these inspectors off the streets. Not only is he jeopardizing himself and his family (he could wind up in jail) he is jeopardizing the client and all of our insurance rates.
posted by Bill Siegel Florida Home Inspection Team Inc
Wind Mitigation Forms being audited
It has come to our attention that many of the insurance companies are now conducting their own audits on previously completed wind mitigation inspections. They are finding that over 50% of the forms turned in have mistakes on them. The result is that they are going back to the homeowner and asking them to pay the premium that they should have paid in the first place.
How can this happen? It is a known fact that many inspectors were touting money back if they did not save a customer money. By turning in false reports, they got paid and the client was happy with their discounts – until now. Also many inspectors were passing garage doors and front doors which did not qualify.
As you look for an inspector to do your windstorm mitigation inspection do not always go by the price. Once again, you may get what you pay for. Remember that only a licensed general contractor, licensed architect. licensed engineer, are the only ones able to sign these forms. The insurance companies do have the ability to accept them from anyone that they deem qualified, but they have pretty much not gone outside of these guidelines. Many contractors are signing off of the reports of others for a price, which will eventually get them into trouble. I am currently working under a company that has quality control in place. No inspections can be turned in without proof in the form of pictures and permits or receipts. Orders without these get rejected. My price may be a little bit higher than the other guy, but you can rest assured that your inspection report is turned in correctly the first time.
posted by Bill Siegel Florida Home Inspection Team Inc.
Florida Windstorm Mitgation
When purchasing a home in South Florida, it is important to check with your insurance company. Most of them will require you to get a windstorm (form 1802) wind mitigation inspection. This inspection can help reduce your insurance if certain aspects of your home meet state requirements.
Wind mitigation is the implementation of certain building techniques in order to limit damage caused by intense wind.
A few facts about windstorms and wind insurance:
- In 2006, Citizens Insurance, one of the largest property insurers in Florida, requested a 45% rate increase for wind insurance. Other insurers took similar actions.
- In Florida, the portion of a homeowner’s premium covering wind damage can be up to 70% of the total, depending on location.
- Wind mitigation benefits homeowners, private insurers, and all levels of government.
Incentives for Wind Mitigation
- In Florida, homeowners can benefit from reduced insurance premiums. Following Hurricane Andrew, Florida passed a law requiring insurance companies to offer their customers discounts and credits for existing building features and home improvements that reduce damage and loss from wind. In order to qualify for this discount, homes must undergo a certified home wind inspection.
- Wind mitigation helps protect the home from damage. Even if a home is insured, it is always costly when a house is damaged, both for the homeowner and the insurer. Repairs can take months, especially during material shortages that follow massive destruction to entire communities, as was the case after Hurricane Wilma struck Florida.
- Lenders in Florida require homeowners to carry windstorm insurance in order to be approved for a mortgage. Insurers may not provide windstorm insurance to homes that are vulnerable to wind damage.
Checklist for Wind Mitigation Techniques:
- Garage doors: These commonly fail during windstorms due to:
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- inadequate door-track strength and mounting systems; and
- flimsy metal panels.
The following features can protect a garage door from wind damage:
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- no windows;
- the tracks for the door that have six to nine mounting brackets, or continuous mounting;
- track brackets that are securely attached to the wall; and
- horizontal and/or vertical reinforcement on all panels.
- Opening protection: Glass doors and windows should be replaced with impact-resistant glass. They should be structurally attached to the building in
order to prevent the entire window from popping out of its frame. Sliding glass doors are especially vulnerable to flying debris due to their large expanse. Once an opening is created during a windstorm, the pressure within the house can rise high enough to cause the roof to fail in areas of low pressure. The picture to the right demonstrates how these areas of low pressure can form. - Roof covering: There are many kinds of roof covering materials, and some resist wind damage better than others. The most common roof covering materials in Florida are composition shingles and tiles. A key factor in roof covering performance is the method of attachment of the roof covering material to the roof deck. Nails, not staples, should be used to fasten these materials.
- Roof shape: “Roof shape” refers to the geometry of the roof, rather than the type of roof covering. The end-walls of gable roofs extend vertically to the sloping roof line. These gable end-walls, if not properly built or braced, have been known to fail outward due to the negative suctions on the wall. Additionally, field testing has shown that hip roofs receive up to 40% less pressure from wind than gable roofs.
- Roof deck attachment: According to insurance claim data, a house becomes a major loss once the roof deck fails, even partially. The most common roof deck types are plywood and OSB. The most important feature of the roof deck by far is the attachment to the framing compared to the deck’s thickness. The following building techniques can help prevent wind damage:
- roof coverings using shingles that meet the FBC requirements;
- roof decks that have been installed with large nails and close spacing;
- hurricane clips/straps that hold the roof structure to the walls; and
- protection of windows and glass doors with impact-resistant glazing or other protection systems.
- roof-to-wall connections: This connection is a critical safeguard that keeps the roof attached to the building and acts to transfer the uplift loads into the vertical walls. This connection is crucial to the performance of the building due to the large negative pressures acting on the roof. Proper installation is essential to connector performance.
- secondary water resistance: This is a layer of protection that shields the home in the event that the roof covering fails. It will reduce leakage if the shingles are blown off. A secondary water barrier is relatively rare in homes. The two most common types are:
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- self-adhering modified bitumen underlayment, which is applied to the exterior of all joints; and
- foam seal, which is sprayed onto the underside of the decking.
Posted buy Bill Siegel Florida Home Inspection Team Inc.