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.