Article 43


Thursday, March 31, 2022

Florida Homeowners Skyrocketing Insurance

image: home and dollar signs

Why Has My Florida Home Hazard Insurance Policy Risen So Much?

By Frank Plesko
Watson Realty
October 28, 2021

You may have noticed that your annual renewal for your home hazard insurance policy has either been creeping higher, or has drastically risen over the past couple years.  Here is a brief history on why insurance costs have gone up in Florida, and what is being done about it.

What has caused insurance rates to skyrocket in Florida?

The initial reason was steadily rising rates due to Hurricanes, especially Hurricane Irma in 2017. The original statute of limitations for filing Hurricane claims was 3 years, so many claims concluded in 2020, with many still in litigation.

The rising cost of “re-insurance”, which insurers pay to ensure they can cover all claims after a catastrophic storm event.

A combination of well-meaning court rulings and changes in state laws over the years has created a “litigation economy” that gives financial incentives to attorneys to file lawsuits against insurers:

A 2016 Florida Supreme Court ruling said: “If 25% or more of a roof is damaged by a problem covered by the policy, the entire roof must be replaced and insurer must pay for it."This created the ‘door-knocking’ public adjusters that do free inspections, to find loose shingles, wind damage, hail damage and old hurricane damage.  Then they get a homeowner to sign an AOB (assignment of benefits), essentially hiring the agent to act on their behalf including hiring an attorney to sue the insurer if they don’t comply. Florida is one of the most litigious states in the country.

Another State Law called “one-way attorney fees”. It says, “if the contractor can win ‘one penny more’ than the insurer’s initial offer, the insurance company must pay the legal fees for both sides.” In one case a homeowner received $35,000 while the attorneys netted $750,000.

What was the result of all this?

Of 15 billion that went to litigated claims since 2015, only 8% was paid out to policy owners. Plaintiff’s attorneys received 71%, and insurer’s defense attorneys accounted for 21%.  That’s 92% paid to attorneys, and 8% paid on policy owner’s claims - for roof repairs or replacements.

Of the average premium paid to insurers, about 30-35% of that goes toward their expected legal fees in fighting fraudulent claims. This is essentially a “hidden tax” that covers the costs of additional litigation that occurs in Florida compared to other states.

Homeowner’s have seen their insurance rise as much as 40% as insurers pass on the costs of settling an ever-increasing number of lawsuits.

Insurers have become unwilling to insure roofing structures over 15 years old, and some won’t even cover those that are over 10 years old! As a Realtor, we now have a very difficult (to impossible) time in assisting our buyers to find insurance on homes with roofs that are over 15 yrs of age.

What is the State of Florida doing about the problem?

The Florida State Senate passed “Senate Bill 76” in April 2021, which addresses several issues surrounding the rising costs of property insurance in Florida. On June 11 2021, Governor DeSantis signed the bill into law.  The bill provides that:

Restricts the ability of roofers to solicit claims by door-to-door solicitations, and slaps legal and financial penalties on attorneys who work with these contractors, frequently filing on their behalf.

Creates a uniform claim filing period (2 years after storm event, not 3).

A policy holder/claimant must notify the insurance company before filing a lawsuit, to give the insurance company sufficient time to inspect the property before a lawsuit is filed.

Changes how attorney fees are awarded in property insurance litigation: Attorney’s fees will be directly related to how successful the insured was in recovering the amount demanded in their litigation.  If the claimant receives a least 80% of the claim, the insurance company must pay all reasonable attorney’s fees.  If the claimant recovers at least 20%, but less than 80%, the insurer will be required to pay the same percentage of fees related to the recovery that was recovered in the action. Adopts federal court standard for awarding attorney fee “multipliers” in claims arising under the property insurance policies and directs courts to presume the “Lodestar Fee” is reasonable, and provides that multipliers will only be awarded in rare circumstances.  Multipliers WERE previously allowed when homeowners had a hard time finding an attorney who would work their claim.

Ensures there is a clear understanding between homeowners and insurance companies regarding when a roof replacement will be covered in full, or not. Limits will be based upon the age and type of roof. 

Insurers to only offers policies that adjust roof claims to “actual cash value” if the roof is older than 10-years old. This means replacement cost depreciation = cash value. 

Allows insurers to offer options of purchasing a “stated value limit” for roof coverage.

So where are we now?  What can I do to help?

There are additional bills in the Florida Senate & House of Representatives that seek to modify or improve on SENATE BILL 76.  Governor DeSantis is firmly for reducing and eliminating insurance fraud and unnecessary legal fees in order to help bring down Florida homeowner’s insurance rates.

You can learn more about “Tort Reform”, and even take action HERE. The insurance industry backs this as a way to rein in the ever rising costs of insurance in our state.



Florida’s homeowners insurance market continues to spiral with 9 companies in liquidation

By Christopher Heath
WFTV Orlando
March 30, 2022

Critics say whatҒs driving this crisis is a pair of things: lawsuits and fraud. Last year more than 100,000 lawsuits were filed for property claims. Thats 130-times more than any other state in the country.

“It’s just becoming a financial burden to homeowners that is above and beyond,” says Chris Cury of the Florida Association of Public Insurance Adjusters.

Across the state, nine property insurance companies have entered liquidation with some of their policies being picked up by other carriers, while thousands pour into the state-backed Citizens Property Insurance, with the insurer of last resort now above 1 million policies after being at just 400,000 a few years ago.

On Tuesday, the Florida Cabinet received a briefing on the homeowner’s insurance market with leaders saying that a bill passed in 2021 (SB76) is showing some improvement, but leaders concede that more needs to be done and the Florida Legislature will have to act. The governor has indicated hell sign a bill dealing with the crisis has stopped short of calling a special session to deal with the issue, instead indicating he’d like the House and Senate to come to an agreement on a solution first.

Here are the nine companies in liquidation, according to the Chief Financial Officers office.

American Capital Assurance Corporation

Avatar Property and Casualty Insurance Company

Florida Specialty Insurance Company

Guarantee Insurance Company

Gulfstream Property and Casualty Insurance Company

Sawgrass Mutual Insurance Company

St. Johns Insurance Company

Sunshine State Insurance Company

Windhaven Insurance Company



What’s next for tens of thousands of Florida homeowners dropped by insurance

By Dave McDaniel
WESH News Orlando
March 30, 2022

Getting insurance for homes these days is difficult and often pricey.

“Make sure the people who are giving us advice have our best interests in mind, according to independent agent James Cleveland.

Cleveland says he’s hearing from three to five people daily who have had their policies canceled, meaning his group, Insurance Services of Central Florida, has to search for new coverage for them.

ԓIf it’s a shingle roof house and it’s over ten years old, most carriers don’t want it, Cleveland said.

Companies already struggling because of major storm claims in past years and skyrocketing costs of roofs and other construction are scaling back who they’ll writepolicies for.

Cleveland says having access to multiple companies can be a benefit.

“"Not every company is writing in your neighborhood or your zip code, so having the ability to market to multiple carriers is really important,” Cleveland said.

Cleveland says with insurance rates going up the temptation is to get a lower premium by agreeing to actual cash value for a roof replacement. He suggests you insist on a replacement value.

“After you’ve had that roof for five or 10 years, now you have a $20,000 replacement, and the insurance company’s only going to writeyou a check for three or four grand,” Cleveland said.

He says paying for a four-point and a wind mitigation inspection might cost you a couple of hundred bucks, but it could make you more attractive to a new company.

“Sometimes it doesn’t net the premium savings we want it to, but in most cases it does,” Cleveland said.

He says to read past the deductible and premium page. Know what’s covered and what’s not long before you’ve got damage.

“You’re buying a promise, it’s a piece of paper, a promise, but you want to make sure it’s the right promise,” Cleveland said.

Cleveland says while a new roof is expensive, it makes your home easier to insure.



Florida passes homeowners insurance bill including $10k for home hardening

Live Insurance News
May 30, 2022

State residents could receive $2 for every $1 they pay for upgrades to protect their homes from damage.

Florida state lawmakers have passed a bill to update homeowners insurance regulations and bring back a 16-year-old program that would pay an owner as much as $10,000 for home hardening upgrades.

The goal of the legislators was to help ease the sharply increasing rates residents are paying for coverage.

The new program meant to help reign in the skyrocketing homeowners insurance rates is called MY SAFE FLORIDA HOME. It has been designed to assist thousands of property owners across the state in receiving free home inspections. On top of that, they CAN RECEIVE AS MUCH AS $10,000 FOR THE REPLACEMENT OF THEIR ROOFS, WINDOWS AND DOORS. That said, a program of this nature has yet to prove itself in terms of being able to rapidly control rapidly increasing premiums.

The last time the program was active, it faced substantial struggles throughout those two years. Moreover, this newer version of the MY SAFE FLORIDA HOME program is offering 40 percent less money than the original. The original was created in response to a similar struggle with HOME COVERGE RATES following a number of hurricanes.

Bringing My Safe Florida Home back was a part of broader legislation focused on homeowners insurance.

Even after having made broad changes with the legislation, they acknowledged that it likely wouldnt cause rates to fall for at least another 18 months, if they decrease at all. They have included certain short-term measures that could ease some of the coverage crisis’ impact.

Among those measures included prohibiting insurers from refusing coverage to a home due to the age of its roof, if that roof is 15 years old or newer. For homes with a roof 15 years old or more, the homeowner can still obtain insurance by requesting an inspection to confirm its condition. The bill also leaves room for a roof with over 25 percent damage to be repaired instead of being completely replaced.

The bill has also formed another $2 billion REINSURANCE FUND. Insurers benefiting from the fund will need to reduce their rates.

Finally, the bill restricts the amount attorneys can collect in the case of lawsuits against homeowners insurance companies. Officials have pointed to a trend that is highly litigious as a major reason for the rising rates.


Posted by Elvis on 03/31/22 •
Section Dying America
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