Insurance Reform : Premiums still rising sharply
This article reports the highlights from legislation passed in 2021 and 2022, key aspects of the My Safe Florida Home program, and includes comments from insurance agents on the impact on homeowners’ insurance premiums.
Over the last 2-3 years it has become increasingly difficult to get insurance on a property with a roof more than 15 years old – and here I am talking of the asphalt roof prevalent in Florida.
Part of the problem stems from Hurricane Irma and the widespread fraud after that event when roof contractors got homeowners to sign up for new roofs based upon “hurricane damage.”
In 2021, Florida represented just 6.9% of total homeowner’s claims, but 76% of the nation’s homeowner’s lawsuits, and many insurers either withdrew from Florida or became insolvent.
A comprehensive property insurance reform bill was passed and signed into law in 2021, introducing several measures to tackle the escalating insurance costs within the state.
One significant change included in the bill was the limitation on contractors’ practices concerning insurance claims for roof damage. This measure aimed to curb fraudulent activities and ensure fair practices within the industry. Additionally, the bill placed limitations on the fees that attorneys representing claimants can receive, preventing excessive charges.
The legislation mandated that policyholders had to file claims within two years of a loss, in an attempt to streamline the claims process and ensure timely resolution. It also strengthened the oversight of the Florida Office of Insurance Regulation (OIR) on companies affiliated with Florida property insurers.
In 2022, additional property insurance reforms were enacted to address ongoing issues in the property insurance market. These reforms included:
• Protecting Policyholders from Nonrenewal: Insurers may not refuse to write or renew policies on homes with roofs that are less than 15 years old solely because of the roof’s age.
• Assignment of Benefits (AOB) Reform: Builds on 2019’s AOB law by banning the transfer of the one-way attorney fee provision through an assignment to third parties.
• Roof Solicitations: Requires roofing solicitations to contain consumer-awareness language that the homeowner is responsible for the deductible under the insurance policy, and it is insurance fraud for the contractor to reduce or waive the deductible or file a claim with false or misleading information.
• Roof Deductible: Allows insurance companies to offer a policy at a reduced rate to consumers that includes a roof deductible of up to 2 percent, with certain circumstances like a total covered loss waiving the deductible.
There were additional provisions aimed at reducing litigation.
My Safe Florida Home
The My Safe Florida Home Program has been re-enacted by the Florida Legislature.
Wind Mitigation Inspection
All owners of site-built, single-family, residential homes or townhouses are eligible to make application for a wind mitigation home inspection. This inspection will identify those elements of the home’s construction which could be improved to mitigate against future wind damages. Inspections will be provided to eligible homeowners free of charge by the State. Applications will be reviewed and approved in the order in which they are received until current funding is exhausted.
When recommended by the home hurricane inspection, program grant money is available for the following strengthening improvements:
Roofs & Structures
• Reinforce Roof-to-Wall Connections
• Install Secondary Water Resistance for the Roof
• Upgrade Roof Covering
• Improve the Strength of Roof Deck Attachments
• Exterior Door Upgrades
• Garage Door Upgrades
• Window Upgrades
The Legislature has authorized matching grants to eligible homeowners up to $10,000 for the actual cost of qualifying home hurricane mitigation projects. The program will provide $2 in grant funds for every $1 the homeowner provides. Applicants whose homes are insured for $700,000 or less and applicants outside of the Wind-Borne Debris region will become eligible to receive grant funds.
Townhouses will be eligible to receive free wind mitigation inspections and grant funds for Opening Protection upgrades only. (Townhouse: A single-family unit constructed in a series or group of attached units separated by property lines. Each townhouse shall be considered a separate building and shall not exceed three stories in height.
Low income grants have been increased from $5,000 to $10,000.
Impact on Insurance Premiums
Despite these comprehensive reforms, insurance agents suggest that premiums continue to increase substantially during renewals. In some cases, insurers are quoting sky-high premiums in the hope that the customer will find another carrier. I know of a case where one homeowner was quoted $1,700 and his neighbor opposite $7,000 by a different carrier.
The first question every prospective buyer in Florida asks about a property is:”how old is the roof?”
And every buyer should also seek several quotes, remembering that insurance agents often represent only certain insurance companies.
- Andrew Oliver, M.B.E., M.B.A.
Real Estate Advisor