Insurance Rates are Rising for Florida Homeowners- Here is why and its effects on homeowner insurance claims
Summary of “Florida Property Insurance Market Inches Closer to Crisis” article by Amy O’Connor.
A recent article from Insurance Journal by Amy O’Connor discusses an analysis of the losses that Florida’s domestic home insurance companies faced in recent years. One of the reasons for losses is the increase in lawsuits, accompanied by an increase in homeowner insurance claims. According to SunSentinel, the lawsuits in 2019 filed against insurance companies more than doubled compared to 2015. Increased litigation for non-catastrophe claims is a possible explanation for the trend.
As a result of an increase in homeowner insurance claims, home insurance companies are expected to continue increasing rates, with some companies requesting up to 30 percent in rate increases. Increased rates put Florida in a critical position. Other sources for the increased rate of insurance, is the increased demand for reinsurance.
The losses are also leading insurance companies to create more underwriting guidelines. For consumers, this equates to paying more for policies due while getting less coverage. Often homeowners turn to Citizens, insurance that is subsidized by taxpayers. Originally, Citizens was intended to be a residual market, with the private sector being the main source of insurance. Citizens’ rate is also capped, which makes it a favorable option for homeowners and a competition for private markets. In the long run, this is creating another problem for consumers as they will be paying for Citizens through their taxes.
In the opinion of David H. Charlip, a Plaintiff’s First Party Insurance litigator, once again the insurance industry is trying to demonize the plaintiff’s bar and blame the consumer for making homeowner insurance claims for covered events for which they have paid years of premium as protection. If the insurance industry has not underwritten its policies properly, if rates need to increase based upon loss experience, if reinsurance is more expensive, then those factors will drive up the costs of future policies. Nevertheless, those events should not result in the consumer receiving less coverage for a higher cost.
Consumers suffering property losses need 100% restoration – ½ of a roof won’t hold water and neither should these proposals to restrict or limit coverage. Although Florida property insurers subscribe to the same motto as casino owners – “the house never loses!”, unlike casino owners property insurers are providing an important and necessary service to their insured at a time of great calamity and need.
By paying their premium, the only gamble the consumer is taking is that they might not ever have any claim greater than the premium paid, NOT that their insurer will avoid paying their claim through restrictive coverage, endorsements, and “fine print”. Hopefully, our state legislators will see the insurance industry’s claims that “the sky is falling” for the propaganda it manufactures for every legislative session.
If you have any questions about homeowner insurance claims in Florida or how are homeowners insurance claims paid, please reach out to us 24/7 at (305) 487-8360.