In January, the National Association of Insurance Commissioners (NAIC) released
a report based on data from 2013 providing premium and exposure information for noncommercial dwelling
fire insurance and for homeowner’s insurance package policies. The
report considered the effect of many factors on the cost of insurance,
such as geographic area, real estate values, construction costs, vulnerability
to catastrophes, mold damage, and population density. For example, areas
experiencing rapid economic growth also tend to have higher real estate
values. Premiums are often higher in areas of greater population density
because the amount of insurance needed is based on the value of the home.
Costliest insured property U.S. catastrophes through 2014
- Hurricane Katrina – 2005
- Terrorist Attacks – 2011
- Hurricane Andrew – 1992
- Superstorm Sandy – 2012
- Northridge, CA Earthquake – 1994
- Hurricane Ike – 2008
- Hurricane Wilma – 2005
- Hurricane Charley – 2004
- Hurricane Ivan – 2004
- Tuscaloosa, AL Tornado -- 2011
When it comes to catastrophe exposure, different areas of the country are
prone to different types. Hurricanes are more likely in areas near the
Gulf of Mexico and the Atlantic Ocean and comprised six of the last ten
most costly insured property U.S. catastrophes. But the last hurricane
to make landfall in Florida was Wilma, in 2005. So why is it that, ten
years later, Floridians are paying more for less coverage? According to
the NAIC report, Florida homeowners pay the nation’s most expensive
home insurance premiums, averaging $2,115, up from $2,084 a year earlier,
while receiving less coverage than policyholders in neighboring states
– even those on the coast.
Texans and Louisianans paid the next highest rates, $1,837 and $1,822 respectively.
In comparison, the national average was $1,096. Of course, $2,115 is the
Florida average – and would be a bargain for many South Florida
residents who often pay more. While it’s understandable that past
catastrophes would have a major effect on repair costs and on reinsurance
protection rates as well, at some point, those rates should at least stabilize.
A representative for the industry-funded Insurance Information Institute asserts that Florida has the highest property insurance rates because it has the
nation’s highest insured catastrophe losses. Insurance companies
and their allies claim that abuses by third parties who gain control of
a homeowner’s benefits are a prime reason for rates to increase
even when the hurricane seasons are quiet. Other concerns revolve around
price gouging by reinsurers, who provide insurance companies an extra
layer of coverage to pay for claims after a catastrophe, though that issue
was marginally addressed by the requirement that insurers buy some reinsurance
through the Florida Hurricane Catastrophe Fund.
With Florida homeowners paying almost double the national average, state
regulators and consumer advocates have been trying to bridge the gap between
the rates. One method has been to generate a policy checklist that must
be completed by insurance agents, with clear details as to what is covered.
In an attempt to help homeowners, there is now an expedited claims process
that requires an insurer to respond to a claim or begin communication
with a policyholder within 14 days of a catastrophe. Insurance companies
are now required to pay homeowners up front for the full replacement cost,
and not just the lower cash value on home repairs. Additionally, any insurance
company that intends to raise rates over 15 percent must now publicize
that intention, and those who wish to voice their opinions can do so at
the requisite public hearing.
No matter whether you pay the highest rates in the country or the lowest,
all policyholders have a right to expect insurance companies will accurately
assess the damage and pay the full extent of the claim. When that doesn’t
happen and you have trouble receiving the compensation you deserve from
your insurance carrier, it can be best to have an attorney advocate for you.
As one of South Florida's most respected and oldest law firms,
Stabinski Law has helped many people sort out their legal rights, responsibilities and
remedies. We are highly experienced in handling insurance loss claims
and, in many cases, we can do so without cost to you. Fees and expenses
are frequently paid by the insurance company, so nothing comes out of
your recovery. We also work on a contingency basis, which means that if
there is no recovery, there is no fee or cost to you. If you wish to learn
more about how our firm can be of assistance to you, we encourage you
to contact us for a free consultation by calling 305-643-3100 or
filling out a case evaluation form.