RANT - 2013 Florida Home Insurance Rate Increase

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RANT - 2013 Florida Home Insurance Rate Increase

Postby BarbK » Mon Dec 10, 2012 10:21 am

I just received my renewal for my home insurance for January 2013 and it has increased another 20% from last year and this is with a $1400 credit for Lexan Storm Shutters. I was stunned to say the least.

Last year (for January 2012), the increase was $1700; At that time, my husband wanted to go bare (just a liability only policy - should be about $600), but I went with having insurance. To lower the premium, I increased my hurricance deductable to 10% ($60K of damage before they pay a dime), I also removed the inflation component, and changed the cost of replacement for interior contents to actual value and changed it to the minimum allowed (40% from 50%). Doing all this did reduce my premium significantly, but it is basically an expensive liablility and fire policy. The non-hurricane deductable stayed at $2500 (the max allowed). I have never had a claim.

I am required by the insurance company to insure the house for $600K even though the county taxing authority appraised value is about $320K, which is probably more in line with what it would sell for. I paid $290K for the house in 1997 and it was built in 1978 and is in a very desirable area. The lot alone should be worth approx $125K. I also would never rebuild this house.

Has anyone just been fed up with FL home insurance industry and just went without (or just liability only)?

Does anyone know if there is a policy that will insure the house for the appraised value rather rather the replacement cost?

TIA for any comments/insights.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby livesoft » Mon Dec 10, 2012 10:22 am

How much would it cost to rebuild your home? Maybe $600K? And why would you want to insure your home for half the value that it would cost to replace it?
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby BarbK » Mon Dec 10, 2012 10:26 am

livesoft wrote:How much would it cost to rebuild your home? Maybe $600K? And why would you want to insure your home for half the value that it would cost to replace it?


That is what the insurance premium is based on; but it would never sell NOW for anywhere near $600K. And it if was destroyed, the lot also has value. I would never rebuild this house - too big.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby jwa » Mon Dec 10, 2012 12:06 pm

It doesn't matter what your house would sell for now or in the future. Property tax assessments likewise are irrelevent. What matters is a hurricane that tears up huge portions of Florida property. What would it cost to rebuild in that scenario with limited and expensive building materials as well as profit motivated contractors doing the work? That is what you are insuring.

It's too bad about the increases you mention and if in your shoes I would feel the same way. However, you have chosen to live in a part of the USA where the wind does a lot of damage. Thus, most insurance companies don't want to insure property there. You have a very limited number of insurance companies to choose from compared to us in non-coastal areas.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby prudent » Mon Dec 10, 2012 12:17 pm

jwa wrote:It doesn't matter what your house would sell for now or in the future. Property tax assessments likewise are irrelevent. What matters is a hurricane that tears up huge portions of Florida property. What would it cost to rebuild in that scenario with limited and expensive building materials as well as profit motivated contractors doing the work? That is what you are insuring.

It's too bad about the increases you mention and if in your shoes I would feel the same way. However, you have chosen to live in a part of the USA where the wind does a lot of damage. Thus, most insurance companies don't want to insure property there. You have a very limited number of insurance companies to choose from compared to us in non-coastal areas.


If I am understanding the OP correctly, he would be OK with being insured for much less than the rebuilding costs and only getting that smaller amount in case of a disaster. Yet that option is not available to him? Taking that to an extreme, what if due to some very unusual circumstances rebuilding costs skyrocket wildly, and it costs $5 million to rebuild? Is the only option to insure for that amount or have no insurance at all, even if a homeowner would be content to take a smaller amount and move to a location where that amount would be sufficient to buy another home?
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby Grt2bOutdoors » Mon Dec 10, 2012 12:20 pm

It is not just the FL insurance industry - how about the entire home insurance industry? They know they litterally have you over a barrel, unless you are financially independent, in which case you can tell them........
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby Jerilynn » Mon Dec 10, 2012 1:22 pm

Here is one, albeit extreme, option.

2 of my relatives moved from Florida in the past year because of the high home insurance rates.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby Quasimodo » Mon Dec 10, 2012 1:31 pm

"Does anyone know if there is a policy that will insure the house for the appraised value rather rather the replacement cost? "

Hi Barb;

The only way to do this that I could think of is a policy with no coinsurance clause. If this type of property policy is available to you, I believe the rates would be substantially higher than regular homeowner's rates, but you still might save some money by insuring the house for the lower market value amount. You may have to contact a different insurance agent, one who specializes in so-called surplus lines.

I don't know if this option is available to you in the current insurance marketplace in your area, and this suggestion is from my memory as a long-ago insurance underwriter.

Good luck to you!

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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby porcupine » Mon Dec 10, 2012 2:51 pm

BarbK wrote:
livesoft wrote:How much would it cost to rebuild your home? Maybe $600K? And why would you want to insure your home for half the value that it would cost to replace it?


That is what the insurance premium is based on; but it would never sell NOW for anywhere near $600K. And it if was destroyed, the lot also has value. I would never rebuild this house - too big.

I have a question: should you need to get the insurance, do you have to rebuild that residence or can you use that money as you wish (i.e., buy a different property that is the same sort of property)?

I ask because the other day, on Dave Ramsey's show, a caller called about his house being in a sink hole area, and it would cost more to repair it than it would cost to buy a similar house. If I recall right, Dave suggested that the caller pay off the mortgage (which was about the same amount as the cost to repair the house) and let go of the house.

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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby BarbK » Mon Dec 10, 2012 4:06 pm

Thanks for your replies;

It's so frustrating because I don't think I would ever collect anything if a hurricane hit b/c there is a newer clause that they would cover only $10K for mold. I'm pretty sure my house would not be leveled, unless there was a tidal wave and then the insurance wouldn't cover that b/c that comes under flood insurance which caps at $250K. In my area, the only houses that had extensive damage in 2004 were the ones that had bad roofs to begin with. - In 2005, I spent over $20K on Lexan shutters.

Last year when the premium increased $1700, I called to complain that there hadn't been a hurricane in FL since 2004 and that increase was insane. What was their justification OTHER THAN GREED to increase another 20% for 2013? - certainly not from hurricanes in Florida.

porcupine wrote:I have a question: should you need to get the insurance, do you have to rebuild that residence or can you use that money as you wish (i.e., buy a different property that is the same sort of property)?

- Porcupine


Yes, assuming the house was totaled, I could take the check and move on or rebuild whatever. That is why last year, I didn't keep the inflation rider.
Unless, it was a fire, I can't imagine it being totally destroyed.


Quasimodo wrote:
The only way to do this that I could think of is a policy with no coinsurance clause. If this type of property policy is available to you, I believe the rates would be substantially higher than regular homeowner's rates, but you still might save some money by insuring the house for the lower market value amount. You may have to contact a different insurance agent, one who specializes in so-called surplus lines.

I don't know if this option is available to you in the current insurance marketplace in your area, and this suggestion is from my memory as a long-ago insurance underwriter.



Thanks - I never heard of that but I will check it out. When we had Allstate (they dropped us in 2006, along with thousands more) and they were trying to pawn us off to Royal Palm for 10K per year THEN, I asked then if I could get liability only and they said it wasn't allowed in Fl. I walked out and found another insurance company that no one ever heard of from an independent agent for less than $10K. I have since found out that liability only policies DO exist for FL homeowners. So maybe this is an option too that no one mentions to the general public.

prudent wrote:If I am understanding the OP correctly, he would be OK with being insured for much less than the rebuilding costs and only getting that smaller amount in case of a disaster. Yet that option is not available to him? Taking that to an extreme, what if due to some very unusual circumstances rebuilding costs skyrocket wildly, and it costs $5 million to rebuild? Is the only option to insure for that amount or have no insurance at all, even if a homeowner would be content to take a smaller amount and move to a location where that amount would be sufficient to buy another home?



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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby Calm Man » Mon Dec 10, 2012 7:02 pm

OP, you raise something that I have been following with interest. I have a cousin who moved to Florida and then moved out. It was NOT because of insurance or anything but rather job switches. However he commented when he moved to Florida about the zero income taxes but after buying a house noticed that insurance was very high. In Colorado now, the taxes are higher but insurance is lower.

So that we at the forum can deal with real numbers, what now is teh annual cost of insurance for this house, which is considered to have a 600K replacement value?

I feel your pain OP as our former president would say. You need though to consider the situation of the insurer. They may seem greedy and maybe they are, however they do have to use risk estimates for their policy costs as they have shareholders and need to sustain their business. The lack of a major hurricane since 2004 is just noise to them as they are looking at long time periods and realize that a single catastrophic event could wipe them out (and possibly leave them too short to pay the policy holders). So unfortunately I see the future being even worse that you are seeing now in any area near a stream much less an ocean. Some insurers may leave permanently as has happened in certain areas of NJ. This is a crisis along the lines of what is happening with long term care insurance where insurers are either dropping out or raising rices astronomically. You could go bare if you could self-insure for the full cost of replacing a home although that would likely be psychologically devastating even if not financially. Good luck on how this all plays out over the next year or two.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby prudent » Mon Dec 10, 2012 10:03 pm

BarbK wrote:Yes, other than I'm a SHE, this is exactly what I want to do.


Apologies for that, no offense intended.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby steadyeddy » Tue Dec 11, 2012 8:12 pm

One thing Sandy made clear is that replacement costs are rising. Meaning, you don't need 20% more hurricanes to justify a premium increase, you just need a 20% increase in labor costs. All increases are approved by governmental insurance regulators, and based on the number of insurers who have dropped out of the FL market for lack of profitability, I have a hard time believing your insurance company's price model is unreasonable.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby hicabob » Tue Dec 11, 2012 8:21 pm

The insurance companies pulled that in California wrt "high risk fire areas" a few years ago - doubling in a year even ... one insurance agent who I was chatting to , and who said he couldn't write insurance for my house anyways due to the shake roof, said it was because they needed to compensate for bad investment returns. I often wonder about ditching homeowners since rebuilding a better house after a fire would not be financially problematic, but the liability part always stops me.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby BarbK » Tue Dec 11, 2012 9:31 pm

hicabob wrote:The insurance companies pulled that in California wrt "high risk fire areas" a few years ago - doubling in a year even ... one insurance agent who I was chatting to , and who said he couldn't write insurance for my house anyways due to the shake roof, said it was because they needed to compensate for bad investment returns. I often wonder about ditching homeowners since rebuilding a better house after a fire would not be financially problematic, but the liability part always stops me.


Hicabob - Look into a Liability Only policy - You won't find this from your local Allstate type agent. The liability from a regular home owner policy is 300K and then an umbrella policy take over. That is how it works in FL. Even people I know that go bare, have a liability policy. In Florida, you must carry HO insurance if you have a mortgage.

steadyeddy wrote:One thing Sandy made clear is that replacement costs are rising. Meaning, you don't need 20% more hurricanes to justify a premium increase, you just need a 20% increase in labor costs. All increases are approved by governmental insurance regulators, and based on the number of insurers who have dropped out of the FL market for lack of profitability, I have a hard time believing your insurance company's price model is unreasonable.


I'm sure what you are saying is true, but I'm sure the areas that were affected by Sandy, haven't seen 20-50% increases year after year. In my particular case, I think the insurance price model is totally unreasonable; I think the insurance companies don't want ANY RISK. I eliminated the inflation factor last year so if they paid it wouldn't be cost them more than last year, they also wouldn't have to pay anything until I had over 60K in damages (hurricane).

Calm Man wrote:So that we at the forum can deal with real numbers, what now is teh annual cost of insurance for this house, which is considered to have a 600K replacement value?


One of the things that the insurance companies do in FL IMO is to inflate the replacement value and include the value of the land with it. The standard hurricane deductible is 2%, so a $300K house would have a $6K hurricane deductible.

My policy includes coverage for a $59K+ structure that never existed; there is no way around that. I don't know anyone that has such a structure and not even sure what it could be (green house???) - Pool enclosures are not covered. Also the inside contents are typically 50% of the replacement value - I don't have anywhere near $300K of inside contents. Last year, in my attempt to lower the cost, I wanted to eliminate both of these; I was able to reduce the 50% to 40% and changed from replacement value to actual value - this saved $900. I would be lucky to get $2K for the contents.

So in 2004, rates had already been rising for a few years - my insurance with Allstate was approx $4600 - (probably could have sold the house for $800-900K then). In 2005, Allstate dropped me; offered Royal Palm for $10K. I went to an agent; found a company that no one heard of - for $4600. Rates increases were within reason for a few years (when Charlie Christ was governor - he vetoed the outrageous insurance increases). Fast forward to now - $8625
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It is usually a mistake to buy unneeded insurance

Postby Taylor Larimore » Tue Dec 11, 2012 9:46 pm

BarbK

Assuming you do not have a mortgage that requires insurance coverage, and assuming you could afford a 100% loss of your home, then going without insurance coverage (particularly if your home is high and well built) is an option you should consider.

In my opinion, it is usually a mistake to pay for insurance we don't need.

Best wishes.
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Re: It is usually a mistake to buy unneeded insurance

Postby BarbK » Tue Dec 11, 2012 10:14 pm

Taylor Larimore wrote:BarbK

Assuming you do not have a mortgage that requires insurance coverage, and assuming you could afford a 100% loss of your home, then going without insurance coverage (particularly if your home is high and well built) is an option you should consider.

In my opinion, it is usually a mistake to pay for insurance we don't need.

Best wishes.
Taylor


Thanks for your response. Yes, the home is paid for; seems well built - can't get wifi on first floor, plumbers doing re-pipe (copper pipes) this year, couldn't get through the first floor to the 2nd floor and had to do pipe in from the porch to the garage to the attic. Roof (tile) is really good . On a barrier island, not directly on the ocean or river. Lexan shutters on ALL windows / doors (keep them up year round on 2nd floor). 1st floor is block/2nd floor is frame.

If a fire destoyed it, we would move to a smaller house. If a hurricane took it down, then the entire area would be destroyed; my husband would retire and we would just leave the area.

I think of my policy with the 10% hurricane deductable as basically fire and liability, and then I think how many houses actually burn down. No worry about raging wild fires.
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The good life of a barrier island

Postby Taylor Larimore » Tue Dec 11, 2012 10:24 pm

Barb:

Pat and I share your insurance delimma, but I suspect there are few places to enjoy life better than living on a "barrier island" in Florida.

Best wishes.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby Deepsea » Wed Dec 12, 2012 1:44 am

I went through the same thing.

Florida homeowner here.

Barb K.......drop State Farm.

I went with Tower Hill...it's not State Farm, but it's not fly-by-night.

Switch homeowners, and while your at it...if you need to shop for new auto policy...you might like what you find.

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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby BarbK » Wed Dec 12, 2012 10:17 am

Deepsea wrote:I went through the same thing.

Florida homeowner here.

Barb K.......drop State Farm.

I went with Tower Hill...it's not State Farm, but it's not fly-by-night.

Switch homeowners, and while your at it...if you need to shop for new auto policy...you might like what you find.

Deepsea


Thanks Deepsea - I will check out Tower Hill. I did the online quote and it came out lower; It asks for Home Value (not including land). This is promising b/c it does not ask for replacement cost - year built and zipcode. My existing agent also covers Tower Hill.

Have you ever heard of People's Trust Insurance Company? - It's based in Boca Raton - I get mail from them to call for a quote.

I never had State Farm - had Allstate but were dropped in their early purge waves.
When Allstate dropped us, my attitude was if they weren't going to insure my house, I could go elsewhere for auto and umbrella. I went with Progressive for auto and the agent found a company for umbrella, but within a year or two, I had Progressive for both auto and umbrella. I already received my umbrella renewal for 2013, and it went down from $800 to $660 (that was pleasant). Last year, I did the Progressive Snapshot device in all of our cars and got the full 30% discount.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby porcupine » Fri Dec 14, 2012 2:53 pm

BarbK wrote:[...]
Have you ever heard of People's Trust Insurance Company? - It's based in Boca Raton - I get mail from them to call for a quote.
[...]

Don't know if this is the same person or not, but more than a decade ago, when I first got into investing, there was a Michael Gold who worked with the "Stock Dr" on a radio show in the Orlando area. The next I knew, he had moved down south and I was getting e-mails about fixed investment options (supposedly similar to a CD) because I had signed up with the "Stock Dr." Either way, the comments here are scary.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby BigOil » Sat Dec 15, 2012 6:06 am

Former Florida resident here. Lived in not too far from USF (i.e. far inland Tampa). Insurance was insane. We got $tate Farm (mutual no profit$ issues) and kept through the early waves of cancellation, but were moving out of state about the time ours policy would have been lost or we changed. House value north of $1MM...newish construction insurance was $7-8K as I recall with alot of "discounts". Stupid big deductibles. That was "good" rate...

I do not think it is "greed", but it is HUGE RISK for well capitalized companies (and of course profits @ non-mutuals). The politics is all around who pays for the risk, and how is hurricane risk is defined to carry the costs to different properties within FL's geography. Our Auto(!) policy had a *hurricane* (huh?) surcharge to help FL State’s risk pools!

Most folks agree the hurricane risk is real (Doh!). But it is very hard to fully assesses actuarially it seems (versus say, actuarially pricing the risk of say a fire...a traditional insurance risk). It also appears for very "close to coast homes" most folks do not really pay for all the (hurrricane) risk they are taking...so everyone pays in FL. A lot.

To an Economist (or Engineer in my case...) I think it's an external cost, like pollution, that is not always fully included in the price of a good or service (unless it is regulated into the price).

Not going to be nicely solved- it's political, not fully an actuarial issue.. Big Insurance will not write this quagmire of real risk and political noise. SO my advice buy from the real small new insurance businesses in FL who are basically covering fire, using 3rd party adjusters for day to day claims, and if hurricane hits they default to reinsurance by the State (and ultimately taxpayers). Oh and they close up shop - bankrupted. Neat business to get into, where the State capitalizes your business for it's biggest risk/cost! Hence a lot of new companies!

Big companies cannot use "closing shop" as a Business Plan, but it's not so bad for an Entrepreneur taking profit *now*...as the big storm may well not happen in their tenure!

Put on some Jimmy Buffet, get a cold one and enjoy the beach! It IS glorious on the coast ex-hurricane!
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby bigcmagor » Sat Dec 15, 2012 9:19 am

We dropped homeowners insurance on our Cape Coral canal home in 2010. Lack of liability coverage is my greatest concern and does cause some consternation. With lanai damage exclusions and a 10% deductible for named storm damage, several years of accrued premiums invested should cover a significant portion of repairs and we would be paying for them anyway given the deductible. If the house is completely destroyed, we would build a new one with current amenities. Our lot is worth as much as the existing structure. At current rates, Florida homeowners coverage doesn't seem to be a good value.

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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby Dandy » Sat Dec 15, 2012 5:07 pm

I can't say I feel your pain because I am not in your position (yet - hello Sandy). Florida home owners are caught in a trap with home insurance and the recent decline in housing values. All I know is I worked for a major company that had a small Property and Casualty company as a part of the much bigger firm. One Fla hurricane wiped out the profit for the whole company for the year. They got out of the P & C business -- too risky and you need approval to raise rates.

I can't imagine what these companies are paying for the Hurricane Sandy damages - but parts of NJ, NY look like war zones. We are well inland and tens of thousands of trees went down and thousands of telephone poles too lots of damaged houses, cars and business. And Sandy hit much more than NY and NJ. I really don't know how P & C companies can stay in business. I know I wouldn't want to insure any property subject to hurricanes.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby Dr. Gaius Baltar » Sat Dec 15, 2012 7:31 pm

Is it possible to get home insurance at a reasonable price in Florida? I'd like to move there in several years because home prices are very low, you can get a very nice single family home for $150,000. If you're looking at a home that's about 50 feet above sea level and constructed after 2004, surely you can get a good rate?

I'm accustomed to paying $800/year on home insurance. If moving to Florida meant paying $9,000/year more for home insurance, then obviously this wouldn't be as good a deal as I thought, as I'd be paying more on home insurance than on mortgage payments!
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby fx24 » Sun Dec 16, 2012 3:20 am

This week I worked with USAA to substantially reduce my FL homeowners. I saved thousands raising the hurricane deductible and rejecting building ordiance. My rate is around $5k with 7-digit home insured value.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby BarbK » Sun Dec 16, 2012 11:19 am

porcupine wrote:
BarbK wrote:[...]
Have you ever heard of People's Trust Insurance Company? - It's based in Boca Raton - I get mail from them to call for a quote.
[...]

Don't know if this is the same person or not, but more than a decade ago, when I first got into investing, there was a Michael Gold who worked with the "Stock Dr" on a radio show in the Orlando area. The next I knew, he had moved down south and I was getting e-mails about fixed investment options (supposedly similar to a CD) because I had signed up with the "Stock Dr." Either way, the comments here are scary.


I called PTIC earlier in the week; was put immediately on hold, they didn't respond so I hung up after 1+ minutes on hold. Thanks for the link; I checked out the comments - very ugly in particular the ones demanding replacement of A/C units - why that is even related to homeowners is beyond me. I'm not going to pursue getting a quote.

bigcmagor wrote:
We dropped homeowners insurance on our Cape Coral canal home in 2010. Lack of liability coverage is my greatest concern and does cause some consternation. With lanai damage exclusions and a 10% deductible for named storm damage, several years of accrued premiums invested should cover a significant portion of repairs and we would be paying for them anyway given the deductible. If the house is completely destroyed, we would build a new one with current amenities. Our lot is worth as much as the existing structure. At current rates, Florida homeowners coverage doesn't seem to be a good value.



You can definitely get Liability Only coverage - I looked into in last year when I was going to drop HO insurance. Should run $600-$700 since it covers $300K and then Umbrella would kick in. You can't get Umbrella without it. Your home, Retirement (IRAs, 401K, etc), and annuities are protected from creditors (lawsuits) so maybe you don't need it.

Dandy wrote:
I can't say I feel your pain because I am not in your position (yet - hello Sandy). Florida home owners are caught in a trap with home insurance and the recent decline in housing values. All I know is I worked for a major company that had a small Property and Casualty company as a part of the much bigger firm. One Fla hurricane wiped out the profit for the whole company for the year. They got out of the P & C business -- too risky and you need approval to raise rates.

I can't imagine what these companies are paying for the Hurricane Sandy damages - but parts of NJ, NY look like war zones. We are well inland and tens of thousands of trees went down and thousands of telephone poles too lots of damaged houses, cars and business. And Sandy hit much more than NY and NJ. I really don't know how P & C companies can stay in business. I know I wouldn't want to insure any property subject to hurricanes.



So maybe the ins company doesn't make profit in a hurricane year; what about all the $ they made in all the other years? All those premiums paid for years without any claims. If I just walked away from when Allstate dropped me, I would have saved over $50K in premiums (so far) plus they aren't going to pay until I paid the first $60K....so that's $110K of damage before they would cough up a dime.

A lot of the damage in NY/NJ was flood related which the insurance companies are not responsible for.

Dr. Gaius Baltar wrote:

Is it possible to get home insurance at a reasonable price in Florida? I'd like to move there in several years because home prices are very low, you can get a very nice single family home for $150,000. If you're looking at a home that's about 50 feet above sea level and constructed after 2004, surely you can get a good rate?

I'm accustomed to paying $800/year on home insurance. If moving to Florida meant paying $9,000/year more for home insurance, then obviously this wouldn't be as good a deal as I thought, as I'd be paying more on home insurance than on mortgage payments!



Have your really found such a house? Is it in the area where you want to live? Home prices are so depressed that a house that costs $150K now probably had close to a $300K price tag when it was built in 2004 (the peak was 2004/2005). From my experience, the insurance companies will base the rate on something much higher than $150K - I would guess $220K. My In Laws bought their house in 2003 (new), about $175K, not on the intercoastal, but not in the middle of the state like Ocala,Orlando, Lakeland, county taxed assessed for $130K now, last time I knew, they paid approximately $1600 for insurance with State Farm. Also had damage from 2004 hurricanes needing new floors (20K) , whereas my house on a barrier island .5 miles wide had no damage (other than fences (not covered) and lamps/lights outside - not even close to making the deductible - no claim).

I don't think your insurance rate would be anywhere near $9K but I'd count on more than $800. Just to throw it in, their property taxes are over $2K. Floridians get a $25K/50K exemptions on taxes, so that tax rate is based on $80K or $105K value.

fx24 wrote:


This week I worked with USAA to substantially reduce my FL homeowners. I saved thousands raising the hurricane deductible and rejecting building ordiance. My rate is around $5k with 7-digit home insured value.



TELL ME MORE - what is the rejecting the building ordiance? I've already raised my Hurricane Deductable to 10%, and last year did everything else to lower the premium. From everything I've heard, USAA is an excellent company, and not the cheapest so $5K for $1M sounds great.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby Dr. Gaius Baltar » Sun Dec 16, 2012 12:23 pm

BarbK,

If you go on Realtor.com, and search for houses within a 20 mile radius of Tampa that are 0-20 years old, with 3+ bedrooms and 2+ bathrooms, 1400+ square feet, 2+ stories and a garage, you can find many many houses that are located in normal-looking neighborhoods that look newly built and don't look low income. You can even use the google maps street view to look around the neighborhood. $150,000 is an average figure, you can find such homes for lower and higher figures. I once found a veritable mansion for $400,000, with 4,000 square feet, an indoor swimming pool, and a built-in movie theater. Not a living room with a couch and a big screen TV, someone had actually converted a room to a small movie theater.

$1800 is reasonable for home insurance, considering I've heard of people paying $10,000. When your in-laws suffered that $20,000 in hurricane damage in 2004, did the home insurance pay for most of it?

I'm wondering if it would be wise or foolish to buy a $150,000 house somewhere in Florida, as opposed to a $300,000 house somewhere less hurricane-prone.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby BarbK » Sun Dec 16, 2012 12:46 pm

Dr. Gaius Baltar wrote:BarbK,

If you go on Realtor.com, and search for houses within a 20 mile radius of Tampa that are 0-20 years old, with 3+ bedrooms and 2+ bathrooms, 1400+ square feet, 2+ stories and a garage, you can find many many houses that are located in normal-looking neighborhoods that look newly built and don't look low income. You can even use the google maps street view to look around the neighborhood. $150,000 is an average figure, you can find such homes for lower and higher figures. I once found a veritable mansion for $400,000, with 4,000 square feet, an indoor swimming pool, and a built-in movie theater. Not a living room with a couch and a big screen TV, someone had actually converted a room to a small movie theater.

$1800 is reasonable for home insurance, considering I've heard of people paying $10,000. When your in-laws suffered that $20,000 in hurricane damage in 2004, did the home insurance pay for most of it?

I'm wondering if it would be wise or foolish to buy a $150,000 house somewhere in Florida, as opposed to a $300,000 house somewhere less hurricane-prone.


IMO, if you want to live in Florida, go for it. I think hurricanes hit other states as often as Florida. Plus homes in Florida are generally built for them. The ground is really good for absorbing the water. I live 6' above sea level and am not in a flood zone. (I do carry flood insurance though - about $360). Most of the damage from hurricanes were due to BAD Roofs. In your home search, try to find one with a hip roof - insurance companies love them and will save $.

Yes, State Farm paid for their floors (less their deductable which was probably 2%) and didn't even drop them.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby fx24 » Sun Dec 16, 2012 1:57 pm

TELL ME MORE - what is the rejecting the building ordiance? I've already raised my Hurricane Deductable to 10%, and last year did everything else to lower the premium. From everything I've heard, USAA is an excellent company, and not the cheapest so $5K for $1M sounds great.


USAA has periods where they will not write new policies in FL, but I waited and eventually got a policy. Building Ordiance is USAA presumed coverage that pays above your insured amount to cover costs resulting from improvements in the building code since the home was built. By rejecting this coverage, I am saying that I will cover such costs due to building code changes. Yes, that means costs to me... but again thats only in event of a loss. The key is that this coverage alone dropped thousands off my policy. USAA has good service reps and, while it takes lengthy conversations, I find that USAA can greatly reduce "added costs" embedded in your homeowners policy. I have however kept my home insured at its insurance-appraised value.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby rotorhead » Mon Dec 17, 2012 2:22 pm

Very much appreciate the dilemma of OP re insurance costs in FL. There are some very good comments and information given in the thread, especially those of BigOil.

In FL the cost of Windstorm insurance is a highly politicized issue; and there doesn’t seem to be any solution that will satisfy everyone. If you just take a look at the development along the coastline from Miami to Jupiter, Naples to Tampa; and other areas as well, there are literally billions of $ of exposure to hurricane risk. Somebody has to pay for all that. The insurance companies are getting zilch on their investments with interest rates at zero; so the premiums are up, and the cost is spread out over all homeowners in the state. That’s life.

We have lived in FL since 1995, and I am long time USAA member. We had all our home insurance with them until 2004, when they dropped hurricane risk coverage because the State would not approve their requested rate increase. As result we wound up in the pool of Citizens Insurance coverage – so far so good with them.

There has been a lot of negative press about Citizens this year especially; with some reported horrific rate increases, but our experience is not bad. Our home was inspected by Citizens in May this year, to confirm that we were being billed properly for our coverage, and we actually received a refund of $12.00 because of some improvements we were not getting proper credit for. When hearing the horror stories, one has to know all the facts to determine the real truth in each individual case.

For Dr. Gaius Baltar, and others who might be interested, I offer some real world experience that might be useful as they ponder the pros and cons of living in FL. We bought our home new in 1995. It's 2 story; pretty typical - CBS first floor, wood for 2nd, concrete barrel tile roof, 10 feet above sea level. No pool. We’re about 1 ½ miles in from the coast in Palm Beach County, in an area designated as mandatory evacuation for Class 3 hurricane. Coverage is $309,000, with 2% deductible. Current actual value about $400,000 – yes, we are one of the lucky ones! Here is a table listing our actual home insurance costs since 2004. Costs have gone up quite a bit the past 3 years, but so have lots of other costs as well. We have 3 separate policies; and our premium year runs from August to August, so the current rate is to August 2013. I hope you find it useful.

Year--Hazard--Flood--Wind--Total--Inc/Dec

2004 294 317 1,414 2,025
2005 320 317 1,575 2,212 +9.2%
2006 346 317 1,793 2,456 +11.1%
2007 448 317 2,251 3,016 +22.8%
2008 629 317 2,022 2,968 -1.6%
2009 637 348 1,548 2,533 -14.7%
2010 750 355 1,737 2,842 +12.2%
2011 814 365 1,917 3,096 +8.9%
2012 994 365 2,066 3,425 +10.7%

My apologies, but finally gave up trying to insert a table and make the columns line up properly. Hopefully you can decipher the details OK. The amounts are whole dollars; just read across under the headings.

As a footnote, we are retired and could live anywhere we choose; and we like it here just fine. Every year on June 1st I get out my hurricane prep check list and get ready. Then we enjoy the summer as best we can; it's hot and humid, but OK. At the end of the season we start consuming the water and canned goods that were in store, and give some to food banks. We've been through 3 storms - Francis and Jeanne in 2004, and Wilma in 2005, with only minor roof tile damage.

It really is pretty good living.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby BarbK » Mon Dec 31, 2012 9:09 pm

Update to my original post:

I went to my agent inquiring about Tower Hill and they don't write policies in my zip code.

My agent got a quote from another company Guardian - she said that quotes were coming in for thousands less, but have been not renewing in subsequent years, (I thought it might still buy me a year). Our quote was well over $10K .... I didn't listen to the exact amount as I immediately dismissed it.

I also got a quote for liability only coverage and that came in at $303 - yes, THREE HUNDRED dollars.

So I have just a short time left before I need to send a check to keep my existing crappy coverage ($60K named storm deductible, $2.5K for other, basically 0 for interior contents since I have actual value - saved $900 per year).

I still am undecided - my husband wants to drop it; When I think of my house as $600K, I'm likely to just buy the insurance. If I think of the house as $400K (including the lot, my max rebuilding cost should be about $300K as I wouldn't build such a large house), I'm good with going bare (with the $303 liability policy).


ROTORHEAD - they are some good rates you have. My flood insurance is the same - I don't even include it in my discussions b/c it is cheap. Are you 1.5 miles from the ocean, or the intercoastal waterway?

Dr. Gaius Baltar
-Info for you: I found out my inlaws have Tower Hill (I guess they finally got dropped by State Farm) but their rate is only $1100 - probably an 1800 SQ FT house, built in 2003, I would guess 1-1.5 miles from the intercoastal.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby bigcmagor » Tue Jan 01, 2013 10:20 am

Barb,

What insurance company were you able to find that would bind liability coverage only?

Regards

Matt
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby Dr. Gaius Baltar » Tue Jan 01, 2013 1:19 pm

Barb, thank you for that info, $1100 is quite cheap. It's good to know that it's possible to find a cheap place in Florida without having to pay through the nose for insurance.

I also got a 24% rate increase in home insurance premiums, it just arrived a few days ago. From $796/year to $986/year. I live in the DC/VA/MD area, we weren't even touched by Hurricane Sandy, and have never filed a claim. Insurance companies are jacking up rates everywhere, it seems.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby BarbK » Tue Jan 01, 2013 3:57 pm

bigcmagor wrote:Barb,

What insurance company were you able to find that would bind liability coverage only?

Regards

Matt


I will call her tomorrow or Weds to get the company name. I get my insurance (auto, umbrella, house) from an independent broker, not an Allstate / StateFarm, etc.
I only asked her to get a quote for $300K since that is the minimum for umbrella; but you can get more.

BTW - I also received my auto and umbrella - Both are with Progressive - auto did not go up (I did that snapshot in 2011 and received the 30% discount). Umbrella went down to 2011 rate (it went up about 20% in 2012) so that was a pleasant surprise.

Dr. Gaius Baltar wrote:

I also got a 24% rate increase in home insurance premiums, it just arrived a few days ago. From $796/year to $986/year. I live in the DC/VA/MD area, we weren't even touched by Hurricane Sandy, and have never filed a claim. Insurance companies are jacking up rates everywhere, it seems.



Sorry to hear about your rate increase. At least when you move to FL you won't be getting sticker shock.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby rotorhead » Tue Jan 01, 2013 11:16 pm

ROTORHEAD - they are some good rates you have. My flood insurance is the same - I don't even include it in my discussions b/c it is cheap. Are you 1.5 miles from the ocean, or the intercoastal waterway?


BarbK, we're about 1/4 mile west of the Intracoastal Waterway, and about 1 1/4 miles straight line from the ocean.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby rogermexico » Wed Jan 02, 2013 2:43 pm

Policies of the type you suggest (generally called actual cash value/ACV) are available in some markets (as opposed to replacement cost), but they are higher risk and don’t really work like you suggest. Upon purchase you agree to a property valuation, which in all cases will be the maximum you’ll ever be paid (minus deductible). However after a damage event occurs, claims processors come in and evaluate damage and give a depreciated payout for each damaged item. So for a partial loss, they’d give a total repair estimate and then a claim check for a much smaller depreciated amount (after separately depreciating the flooring, drywall, cabinets, etc.). Even in a case of total loss, I’m pretty sure that they won’t just hand over an amount up to the cap. Here they can again depreciate according to their rules. Good luck getting them to tell you in advance what your depreciated payout would be (generally linear depreciation based on xx year lifetime for each damaged item).
So if your appetite for risk and ability to handle possible adverse effects (due to depreciation) are high, then such policies might be for you. However with ACV the magnitude of the risk is also not entirely clear ahead of time. I have such policies on my rental properties, but also have capacity to make repairs myself.
My ACV policy does not require me to rebuild in case of total loss.. I can take cash and use it elsewhere.
If you have a mortgage, your mortgage holder can place restrictions on the type of insurance you have (e.g. require replacement cost coverage).
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby specabecca » Wed Jan 02, 2013 4:00 pm

fx24 wrote:
TELL ME MORE - what is the rejecting the building ordiance? I've already raised my Hurricane Deductable to 10%, and last year did everything else to lower the premium. From everything I've heard, USAA is an excellent company, and not the cheapest so $5K for $1M sounds great.


USAA has periods where they will not write new policies in FL, but I waited and eventually got a policy. Building Ordiance is USAA presumed coverage that pays above your insured amount to cover costs resulting from improvements in the building code since the home was built. By rejecting this coverage, I am saying that I will cover such costs due to building code changes. Yes, that means costs to me... but again thats only in event of a loss. The key is that this coverage alone dropped thousands off my policy. USAA has good service reps and, while it takes lengthy conversations, I find that USAA can greatly reduce "added costs" embedded in your homeowners policy. I have however kept my home insured at its insurance-appraised value.


Just to point out a flip case, I have a home that is appraised at 97k that requires a ~3k premium from USAA (3,381.94). I am in a coastal county, but not in a flood zone and as far as you can get from the water. What do I get for 3k? Barely anything. I have no building ordninance, max hurricane (10%) and all other perils deductible (2K), 50% of the goods in my house insured at actual cost (I have to prove I owned each item before they will pay anything), etc. I talked with reps every six months, in fact, until they started saying 'good news! We eliminated fee X (~20$), but your overall premium was just reassessed and now you owe another 300!

Their main issue seems to be that our roof has a small section that is considered 'flat', and therefor they classify the whole roof as 'other'. We can pay some 10-15k to redo that entirely to reduce the rate, but that will last exactly as long as they claim that is the main problem. Next it could be windows, etc. Also, our roof has been inspected and improved already, and is considered entirely sound/safe by contractors. It would be a one time fee to make a bunch of insurance folks happy, until they decide it doesn't. I'm not willing to jump through their hoops.

Oh, and we are undwater on the mortgage by 60k so moving is not an option. Ah well, at least we have a happy home and cute 50's neighborhood that we enjoy.

If/when we pay off this house, we are going liability only and will never, ever put ourselves in a position where we are required by anyone to purchase an insurance product. I look forward to that day. Often.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby BarbK » Thu Jan 03, 2013 2:29 pm

I wrote out a long post and lost it; so here's the recap:

BigMajor - Liability only - Lloyds of London (woohoo a company I've heard of). Not sure that it matters, but the brokerage that my agent obtained the quote was Tapco.

Rotorhead - That is excellent for you.

RogerMexico - That type of coverage would be much better than going bare.....Ideally, I would choose $300K for the house (vs $600K I'm forced into), 2-5% for hurricane deductible (vs 10% to make cost more palatable), $50K of replacement value or zero for contents (vs actual value of 40% of the house). Are your rental properties in Florida? If so, what is the company (ies) that provide such insurance? I would definitely pursue such a policy.

Speccabecca - Seems like I have the similar limits as you - but yours is worse if it is based on $97K replacement value. On your interior contents, I was able to get it lowered to 40% of the home replacement cost - I would have chosen zero if I could, because actual value will probably be close to zero once depreciation is factored in. I get the 'good news' in my renewal policy also.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby rogermexico » Thu Jan 03, 2013 2:48 pm

Regarding ACV (actual cash value) policies, they are offered by Shelter Insurance but my properties are in MO not FL. I would check with a local Shelter agent and probably an independent agent. These are not really encouraged by any agents, but if you explain what you want and make clear you understand the types of risks they represent (depreciated payouts), you may be able to find them in FL. I used high 5k deductible, ACV policies in an attempt to get out of an insurance pool that contains people who just call their agent for every little thing.
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Re: RANT - 2013 Florida Home Insurance Rate Increase

Postby bigcmagor » Fri Jan 04, 2013 8:15 pm

Thanks for replying with the information requested Barb.

Leaving freezing Indiana tomorrow morning for three months of uninsured bliss in our Florida home!

Regards,

Matt
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