2018 Biggest issues facing Florida Homeowners Insurance

No matter what type of home insurance policy you buy, there is a list of common “dangers” that most insurance policies will not cover.If you know exactly what your homeowners insurance covers and excludes will help you determine if you need to buy additional coverage for your particular needs and circumstances.

Types of Home Insurance there are a variety of standard homeowners insurance policies. The most basic policy, HO-1, covers only a few dangers and insurance agencies no longer sell them in most states. The HO-2 policy, generally called “extensive form”, covers 15 dangers/ perils.

These are:
  • Fire or lightning
  • hurricanes or hail
  • explosions civil disturbances or riots
  • damage caused by aircraft/helicopters
  • damage caused by vehicles
  • smoke
  • vandalism or malicious offenses
  • robbery
  • volcanic eruptions
  • object in Fall/descent
  • weight of ice, snow or sleet
  • accidental discharges of water or steam from piping systems, heating, air conditioning, or from fire sprinklers, or from an appliance
  • discharge, cracks, burns, or sudden overflows and Accidental steam systems or water heaters, air conditioning systems or automatic fire systems
  • freezing pipe, heating, air conditioning, or fire sprinklers, or an appliance
  • sudden damage and Accidental artificially generated electric current (does not include leaks to a tube, transistor or similar electronic component)
a HO-3 policy is often called “special form” because it covers everything except certain perils listed in the policy. It’s the most popular kind of policy. The standard HO-3 policy contains these exclusions:
  • laws or ordinances, such as demolitions or construction required for your home to be in accordance with the codes
  • Earth movements, such as earthquakes, seismic movement, tunnels/sinks
  • Landslides, and sludge flows water damage, such as floods,
  • defective drains and water seeping into the foundations
  • blackouts
  • you did not take measures to save your property during or after a loss
  • wars, include Declared and undeclared
  • nuclear dangers
  • intentional losses, which you did to the property

There are two important questions to ask your insurance agent. Which losses do you cover and which does not cover your policy? Besides, what kind of coverage can you need given your situation?

Are you familiar with the exclusions mentioned in your home insurance policy?

Since policies may vary in different states and insurers, the best way to find out the exclusions is to read your policy. If you find something you don’t understand, ask your agent or insurance agency.

Now we must talk about the 8 biggest issues affecting Florida Homeowners Insurance market. Each is a huge problem in itself, but I will attempt to cover all of them, one by one

Incorrect Home Replacement Cost

By purchasing homeowners Insurance we usually think that the policy should give us coverage for the same amount we paid for the house. The reality is that this is not enough. If your house is damaged or destroyed, rebuilding it could cost you more than you paid for it. Understanding what the replacement cost is and what the market value is can help you make the right choice to not jeopardize your home or the financial security of your family.

What is the replacement cost the replacement cost is the amount of money typically needed to rebuild the house if it was damaged or destroyed. It seems unlikely, but rebuilding a house is more expensive than making a new one.

When you secure your home for its replacement value, your insurance company reimburses you for the cost of rebuilding or repairing your property according to the size and structure of the House that was lost or damaged.

Why it is more expensive to rebuild than to build the contractor that will reconstruct your house does not have the option to buy the materials in bulk, because they would be more expensive pieces, materials and finishes.

When a house is rebuilt, it is made from the roof down, which implies more time and work.

If it is necessary to demolish, the cost rises much more.

When a contractor manufactures several new homes at once, he can efficiently organize his employees ‘ working hours, but if it’s a single-house rebuild, the job is not as efficient and costs rise.

Changes in building codes may require costly upgrades in both the damaged areas of the house and those that remained intact. For example, in old houses or many years of construction, it may be necessary to update all cabling and other services.

After a natural disaster the cost of rebuilding materials and manpower is raised due to demand in the affected area.

To determine replacement cost the best way is to hire a builder contractor or other construction professional to prepare a detailed budget.

Benefits of securing your home for its replacement value in the event of a loss, your policy coverage for the replacement value will help you recover your home and spend the minimum in rebuilding it. For additional protection, secure your home for at least 100 percent of your replacement cost.

Don’t take risks • Review your policy annually to make sure it covers your needs, as replacement value changes over time.

• Learn about changing market conditions in your area, because when labor, material and transportation costs are raised, the replacement value in your area is affected.

• Inform your insurance company about the changes and updates you make in your home,

How to determine replacement cost the best way is to hire a builder contractor or other construction professional to prepare a detailed budget.

Benefits of securing your home for its replacement value in the event of a loss, your policy coverage for the replacement value will help you recover your home and spend the minimum in rebuilding it. For additional protection, secure your home for at least 100 percent of your replacement cost.

Don’t take risks • Review your policy annually to make sure it covers your needs, as replacement value changes over time.

• Learn about changing market conditions in your area, because when labor, material and transportation costs are raised, the replacement value in your area is affected.

• Informs your insurance company about changes and upgrades you make to your home, because they can raise your estimated replacement cost.

• For maximum protection, purchase a policy that has an inflation clause.

What is the market value is the amount that a buyer would pay for a property and its land under the conditions in which that house is at the time of purchase. The market value is not only affected by the costs of materials to rebuild and labor, also by other factors, such as crime statistics in the area, proximity to good schools and the availability of similar housing.

Assignment of Benefit Fraud

Be very careful with those people who knock on your door offering help with repairs to things like the roof and windows. Never pay before you finish the job or sign a beneficiary designation (AOB) to begin work in the home.

These are some tips from consumer protection agencies, who warn that after the passage of the hurricane this type of fraud is going to multiply and most likely try some other form of clever scheme.

Damage caused by Hurricane Irma creates opportunities for repairers and attorneys who are asked to sign a beneficiary assignment form (AOB) before starting work. By doing so, homeowners lose control of their insurance policy, which may result in a fraudulent increase in claims and legal lawsuits against insurance companies that dispute that amount. The strong increase in AOB cases is the cause that many property insurance policies have increased.

“Unfortunately, hurricanes attract scammers who benefit from other people in times of crisis,” said Mark Wilson, president of the Florida Chamber of Commerce, who also heads the Consumer Protection Coalition. “People who have suffered damage should first call their insurance agent or company before signing and giving control of their insurance policy to someone else.”

Homeowners do not need to sign a AOB to begin repair work at home, and they must be very careful with those who pressure or refuse to make repairs unless you sign that document.

Car owners should also be alerted to people who go from house to house to install new windshields, even if theirs have not been damaged, before an insurance agent can inspect the damage to their car.

Three additional scams with which you have to be careful: payment of repairs in advance. This scam usually starts with a “contractor” who tells you that it needs a generally large amount as an advance to cover the cost of equipment and materials. Probably never see him again, or if he comes back, the work is probably mediocre.

Require a written contract detailing the work, materials and price of both materials and workmanship. If you must advance some money before you start the works, try not to be more than 10 percent of the total. Get at least three estimates for each job that includes large repairs. And always be careful with those who knock on your door offering services after a hurricane.

Called Robot claiming payments. These calls tell the victims that the payment of their insurance policy is overdue and that if they do not send the money immediately they will be cancelled. “This is a fraud. You should only believe information that comes directly from reliable companies, “explained Roy E. Wright, director of FEMA’s National Flood Insurance Program, to the Washington Post. Always contact your insurance agent directly for payment or claims matters.

The Consumer Protection Coalition adds:

  • Call your insurance company first to report damage.
  • get only recognized companies and watch out for strange people who knock on your door asking for personal information.
  • Check all documents before signing them and ask questions to know exactly what you are signing. Ask who is responsible for paying the seller: you or your insurance company.
Limited water loss coverage

According to the Sun Sentinel, 79% of the claims in Florida in 2014 were attributable to some type of water damage. Common sources of water damage include leaks in the ceiling, plumbing failures, and leaky air-conditioning units.

Repairing a property after water damage can be very costly. Sometimes it is necessary to remove the broken pipes from under a concrete slab, which requires the replacement of the floor of a house. Other times, it is necessary to completely replace a damaged roof. A homeowner may be required to find an alternative space while these repairs are made.

Fortunately, most homeowners have insurance policies that cover these big expenses. Recently, however, insurers in Florida have quietly tried to reduce their coverage for covered water damage. Insurance companies often insert a language into their policy that creates arbitrary limits or, worse still, complete exclusions from water damage. An insurer will often slip these limitations and exclusions into your policy when an automatic renewal is sent to you by email. He won’t even get a phone call.

If you do not read your new policy (again, you are not alone), you will never know that you have lost coverage for water damage. As a result, you will continue to pay the same insurance premiums and do not have coverage for the main cause of loss covered by property insurance policies! Considering that the damage caused by water is the cause of about seventy nine percent of the claims, you may end up facing the prospect of paying for the costly repairs you thought were covered in your Pocket.

Because of many fraudulent assignment of benefit claims, most insurance carriers in 2016 saw a significant increase in water loss claims. Most were reporting non-hurricane loss increases of 40% and higher, and now carriers are looking for ways to address these fraudulent claims.

Many of Florida Homeowners carriers such as Velocity, Universal, Heritage, Security First, Federated National, Tower Hill, and People’s Trust have exclude water completely from homes that are over 40 years old. Insureds are only given the ability to buy back $10,000 in “limited water damage” coverage for an additional premium.

Some other insurance companies, like Citizens, are implementing new policy verbiage to their policies. The new policy wording limits reasonable emergency measures made after a loss to $3,000 or 1% of the building limit (whichever is greater) from being made prior to an inspection by the company’s loss adjuster. Still other carriers, still are willing to offer Water Damage coverage, but they must personally inspect every risk and have become stricter on their underwriting guidelines.

Limited Mold/ Fungi coverage

Property COVERAGES PERILS INSURED towards – COVERAGES A, B, C and D “We” can pay up to $50,000 for direct bodily loss to included assets due to or on account of water or water borne cloth underneath the floor of the ground, together with water or waterborne substances which exerts strain on or seeps or leaks via a constructing, sidewalk, driveway, basis, swimming pool or other shape. However, we will no longer pay for bodily loss to the portion of the constructing or structure through which water or waterborne substances seep or leak. The Water damage Exclusion under Exclusions That follow to belongings Coverages is deleted with respect to the coverage supplied through this endorsement. The restriction of insurance is the maximum “we” will pay in any one incidence. This limit isn’t always in addition to the limits of insurance applicable to the broken covered property. The deductible proven at the declarations is applicable to every covered loss

Sinkhole Coverage

Potholes can cause major damage to buildings and personal property. These strange events occur in almost all fifty states in the United States. Some occur naturally, while others are the result of human activity. Natural sinks are particularly common in Florida, Texas, Kentucky, Pennsylvania. , Missouri and. Alabama.

Sinks often occur without notice. In March 2013, a giant sinkhole caused the collapse of part of a Florida complex, causing the guests to flee.

In 2014, a large sinkhole was opened under a vintage car museum in Kentucky. Eight valuable cars fell into the void. Later that year a sinkhole suddenly appeared in a Chicago neighborhood, swallowing three vehicles.

Natural sinks natural sinks occur when the bedrock is dissolved in water, causing the soil to collapse on it. The bedrock typically consists of carbonated rock, such as limestone or dolomite. The rocks which are easily dissolved in the water are called Karst.

A sump is formed when the water falls over an area made up of easily dissolved rocks, and the water cannot drain. Water absorbs carbon dioxide as it seeps through the soil. Carbon dioxide makes the water slightly acidic. The acidic water accumulates inside the rocks, which dissolve and create a depression. In some cases, the soil on a sump collapses very slowly. In others, the soil collapses abruptly, causing a catastrophic failure of any structure found above.

The gaps vary greatly in size and shape. Some are superficial, while others are very deep. Some are a few feet wide, while others have acres wide. Some sinks are shaped like a bowl, while others have steep sides.

Artificial sinks Some sumps are man-made. Situations that can trigger an artificial sump include a breakdown of the water line, the removal or deviation of groundwater, the collapse of an abandoned mine, and a buildup of water on the soil surface.

A huge sinkhole was created in Louisiana when the salt was extracted from an underground salt depot.

Some sinks are triggered by drought or repeated fluctuations between drought and heavy rainfall. Both natural and artificial sinks can be caused by water or floods that occur after a prolonged period of dry weather.

Insurance coverage today, most small businesses that acquire commercial-property policies Choose “All-risk” policies. These policies cover losses or damages caused by any danger that is not specifically excluded. In most of the United States, collapse of the sump is not an excluded danger.

While they cannot exclude the collapse of the sump, many property policies do contain a general exclusion from collapse. This exclusion applies to property that falls abruptly or sinks, loses its structural integrity, or cracks, bumps, or falls. However, the exclusion of collapse in many policies contains an exception. This exception offers subsequent coverage for the collapse of the property caused by any of the specified loss causes. Sump collapse is usually included as a specified cause of loss. Therefore, the collapse of the covered property caused by a collapse of the sump is usually covered.

Keep in mind that many commercial property policies, including ISO policy, specifically define sump collapse. This term means the sudden collapse or collapse of the Earth in underground empty spaces created by the action of water on limestone or dolomite. The collapse of the sump does not mean collapse or collapse of the earth in artificial underground cavities. In other words, the collapse of the covered property is covered if the collapse is caused by a natural sump. The collapse caused by a man-made sump is not covered.

Water backup / Sump Exclusions If you live in an area that is prone to sinks, your property policy may contain a sump exclusion. Some states (including Florida) require insurance companies to offer sump coverage to policyholders for an additional premium. Unfortunately, this coverage can be very expensive.

Florida Law also requires insurers to provide coverage for catastrophic collapse of land coverage. This coverage applies only if the soil cover collapses, leaving a clearly visible depression. In addition, the building must withstand the damage of the foundation so that the building is condemned. A collapse of the sump does not always cause a catastrophic collapse of the soil cover. Therefore, if you operate a company in Florida and want to protect against SAG damage, you must purchase sump coverage.

Dog Liability

Living with a pet has a multitude of advantages, but we must not lose sight of it that also carries certain responsibilities. Although our pet is perfectly trained, we can never fully ensure that he will not bite any stranger, either because he feels threatened, afraid or for any other reason. In this sense, it is necessary to be clear that the owner of the dog is the one who must assume the expenses for the possible damages that cause the animal, both to objects and to people.

Since domestic animals become a member of the family, many home insurances contemplate among their coverages certain situations in which our faithful friends can be involved.

What does the home insurance cover exactly if my dog bites someone?

As a general rule, household policies that include pets protect against the liability of the owner of the animal for the damages that it may cause to third parties. Therefore, in these cases, the home insurance should cover when a dog bites to another person.

In addition to this protection, the insurer also compensates for the accidental damage that the animal may suffer, as well as the veterinary expenses arising from the incident.

However, it is advisable to check the specific conditions of the policy to know if we are actually covered in a situation as well or if in your case, it is necessary to hire a pet insurance, which includes the civil liability as coverage Main.

In the event that home insurance is responsible from the bite of the dog, it is also important to know the type of animal that is covered, as it is likely that dogs of dangerous breeds are excluded. In the same way, the insurance company will also establish certain vaccination, safety and identification requirements of the animal so that the owner of the dog can benefit from the compensation for civil liability.

It is of paramount importance to revise the exclusions of the contract to find out in which situations the insurer may not be responsible for the incident, such as if the bite occurs when the dog is lost or without a leash.

How to be protected to the maximum having a dog?

In addition to the protection that offers us a home insurance against the civil liability to which our pet will take place, as may be the case that our dog attack someone, if it were the situation that the policy of our house did not contemplate a coverage Of these characteristics, it is always advisable to be backed by a pet insurance.

In certain areas and counties, those who have a dog as a pet are obliged to sign a liability insurance covering the material and personal damages that the animal may cause to third parties.

The following list of dog are usually on the bad dog list and are considered uninsurable

Pit Bull Terriers
Staffordshire Terriers
German Shepherds
Presa Canarios
Chows Chows
Doberman Pinschers
Cane Corsos
Great Danes
Alaskan Malamutes
Siberian Huskies

Air Bnb coverage / Short term Rental

If you are considering that you are going to rent your home or part of it, so be it for a few days, the first thing you should do is call your insurance agent. Participating in the systems of renting directly to other people or through programs like Airbnb could be a good way to earn extra money, and have become very popular, but could also put it in a vulnerable situation, including Financially. Imagine that your guest accidentally causes a fire or is injured while at home and demands it, do you have sufficient protection and necessary for such cases?

Therefore, before signing any contract, talk to an insurance professional explaining the situation and the risks that might be running. Usually, if you only plan to rent your home on a different occasion, some companies may not object to extending the coverage you have to the tenant. But this is in exchange for you to notify the insurer in time.

It is not uncommon that on special occasions such as when there is a very important event, that homeowners rent a part or all of the housing to visitors in the city, especially if there are not enough hotels to demand the event. In the face of these sporadic situations, many insurers consider them when designing the homeowners or tenants policy. But other insurers may require you to obtain an attachment or endorsement of the policy you already have for your home so that it is broader and encompasses your tenants.

If your plans are to rent a part or all of the house regularly, there are many insurers who will interpret this as you are using the house to generate income and are therefore giving you use for business at home. Homeowners ‘ insurance policies are designed to provide the necessary coverages for a particular home or residence and to cover the risks of a particular residence not the potential commercial hazards generated by a business. In this case you would need to get a specially designed policy for a hotel or hostel (in English known as Bed & Breakfast policy). But there are also some insurance companies that can now offer certain civil liability coverages for people who are going to rent their homes on the shared economy market and who can take one month at a time. Like all products and contracts, it is important that you read the policies carefully so that you know the exclusions and limitations thereof.

Now if you decide to use one of these shared economy systems to rent for a few days a house or room of an unknown person (not a room in a traditional hotel), it is also a good idea to read the coverage of your policy Landlords or tenants of homes. It is common for personal belongings in your home to be covered even if you have them with you outside the home or main residence, for an amount less than stipulated if you were in your home, but if something happens to your belongings outside the house , it is possible to file a claim to the home insurance. Likewise, liability coverage may also help you if you accidentally injure a third party and they want to Sue you.

Home Insurance prices are Skyrocketing

South Florida homeowners are likely to be insured by citizens Property Insurance Corp. See your annual premiums rise by more than 10 percent next year if the company’s price increase is approved.

“The horizon looks very bleak,” said Barry Gilway, president and chief executive of Citizens, the state government insurer and the second insurance company in terms of number of property insurance policies in Florida – after Universal Property & Casualty – At a board meeting of the insurer held in the Maitland suburb of Orlando.

He did not mean the beginning of what is expected to be a fairly hurricane season Active. Instead, according to him, the stratospheric increase in premiums in Miami-Dade, Broward, and Palm Beach counties is due to something that regulators have been unable to track: Excessive claims for water damage, with amounts inflated by owners of Housing that assigns their applications to the contractor making the repairs, which gives the contractor – and often the aggressive legal firms they hire – the right to directly receive payments from the insurance company.

10.5% will be the increase for homeowners who have property insurance with Citizens in Miami-Dade and Broward next year if the requested increase is approved by state regulators, the state-level residential premium increases They will reach an average of 5.3 percent, but because each policy is based on the landlord’s risk, no one pays exactly the average. The company wants an average rate increase of 10.5 percent for Miami-Dade, 10.4 percent for Broward, 9.3 percent for Palm Beach and 3.8 percent for Monroe.

This is a problem that not only affects Citizens, but also most other insurers, and has been accumulating for years. For the third consecutive year, the Florida legislature left Tallahassee last season of legislative sessions without doing anything to solve the problem. Citizens ‘ board member Gary Aubuchon, a former Republican state representative from Cape Coral, directly blamed legislators for the fact.

Citizens Property Insurance “is getting into shark-infested waters on a ship that was created by the legislature,” he said. “Every year they throw us into those waters, and we return asking them to repair the ship, and they send us back with arrangements of tape.”

Blamed on litigation instigated by contractors state law allows beneficiaries of insurance policies that need to make repairs to their homes to transfer their rights to request reimbursement from the insurance company to independent contractors. Some contractors persuade homeowners whose plumbing or electrical effects have been broken to have their benefits assigned to them (AOB) and, with the help of lawyers, present lawsuits against the insurer if they are denied the Or if the payments are reduced.

The cost of litigation, added to the repairs, has increased the cost of the average Citizens ‘ homeowners risk policy of $367 in 2011 to a projection of $2.083 for 2017, the company reported.

Gilway said 50 percent of water damage claims in South Florida are brought to litigation, which can make a case five times more expensive to solve. (without litigation, the average claim cost is between $6.000 and $7.000, but if an attorney takes the case the cost increases to $30.000 or $35.000 per claim, according to the price request.)

In South Florida, water damage claims account for 95 percent of the total litigation, and 56 percent of the company’s multiple-risk cases, according to Gilway. For that reason, insurers have warned Florida legislators to tighten regulations in an attempt to control litigation, or else rising losses will continue to cost consumers more.

State law limits Citizens to a maximum increase of their 10 percent premium per year by policy beneficiary, but that does not include the portion of the premium included in the Hurricane Catastrophe fund, so some premiums They’ll rise above the limit. The company predicts that the limit will lead to a loss of around $124 million this year, and from $182 million in 2018 in its multiple risk policy lines, Gilway said. The profits from the commercial insurance lines will offset some of those losses in 2017, he said, but not in 2018.

Private insurance companies, which do not have the same restrictions, are asking for premium increases even higher than citizens ‘. The Deerfield Beach-based People’s Trust, which secured 54.267 single-family homes in South Florida, called for an average increase of 14.5 percent for multiple-risk coverage in March. The Florida office of Insurance Regulation rejected the people’s Trust request, and instead improved a higher–an average of 16 percent–to cover their losses.

In addition to the premium increases, the Citizens ‘ Board of Directors authorized the company to ask the insurance regulatory office to further approve changes in the way the company handles the claims, in an effort to persuade the owners of Housing to avoid litigation and reduce costs. If the changes were not approved, citizens said their losses and risks will increase.

Among the changes: ▪ impose on homeowners a $10,000 limit on non-climate-related water damage claims unless they voluntarily agree to follow Citizens ‘ repair guidelines, in which case they may Overcome the limit and receive full coverage.

▪ require that any independent company that decides to receive the insurance benefits of a homeowner be subject to the same obligations as the landlord after a loss, something that is not reflected in the current law.

▪ limit coverage to a non-climate-related loss every two years and two in five years.

▪ do not collect the deductible in cases of water damage claims if the landlord agrees to work within Citizens ‘ managed repairs program – which often means using insurance contractors – to repair damages in a effort to avoid litigation.

Without reform, the Florida Office of Insurance Regulation also projects that home insurance premiums will rise an average of 29.5 percent statewide over the next five years. Rate hikes of more than 50 percent and even 60 percent are expected not only in Broward and Miami-Dade counties, but also in Clay and Duval counties and even in Orange, Seminole and Osceola counties.

Florida’s insurance market has proven that it can survive many storm and maybe even the storm of the century,but will all these issues the real question should be if it can survive all this political turmoil and dysfunction.