You probably know that your Florida home insurance is going up this year. But you might not know about other developments that could raise your rates even further.
The 10% to 15% rate increases on your Florida home insurance probably won't surprise you when they show up on your bill later this year. But you will be surprised if you lose discounts that cause your Florida home insurance to skyrocket.
Presently, Florida homeowners like you get the benefit of wind mitigation discounts for multiple home features that help make your home more resistant to hurricanes. Home insurance companies are required to give you this discount under Florida law and a specific formula must be used to calculate it. It includes discounts for things like the shape of your roof, whether your roof has a secondary backup system for removing water, the methods used to attach your roof to the walls of your home, and whether or not your home has hurricane shutters among others.
Florida homeowners have enjoyed these discounts which can eliminate over 50% of the wind insurance premium on a home. However, homeowners sometimes are disappointed with those discounts as well. One homeowner featured in the St. Petersburg Times spent $5,225 for hurricane shutters and to reinforce the garage door on his Spring Hill, Florida home. He was disappointed when he learned that his $5,225 investment gave him a discount of only $16.11! Other Florida homeowners have saved considerably more.
Started in 2002 along with improvements to the Florida building code, these wind mitigation discounts were an important step in the process to deliver lower Florida home insurance rates to those with homes less likely to sustain serious damage in a Florida hurricane. Those discounts were doubled by the state of Florida in 2006 in order to provide some rate relief after the 2004/2005 hurricane season.
At the moment with the approach of the 2010 Florida legislative session, home insurance companies are asking legislatures to reduce some of those discounts. In some areas the companies might have a point. For starters, there does seem to be a certain amount of fraud associated with those discounts. This fraud can come from both the homeowner misrepresenting improvements made and it can also be due to errors in the home inspection report. In any event it could lead to homes being granted discounts they aren't entitled to. Companies also point out that the doubling of these discounts in 2006 was more of a political reaction to high rates than a scientific process to properly price the discount based on the real way a home would perform during a hurricane.
Some home insurance companies are ordering new inspections to get a better picture on what's really been done to harden your home. If a re-inspection on your home produces discrepancies, you might lose some of your discounts and face a massive increase in your Florida homeowners insurance premiums.
From your perspective as a homeowner, rolling back these discounts would add significantly to the cost of your Florida homeowners insurance. And this would happen during one of the worst recessions during our lifetimes. For some homeowners in Florida, losing or reducing those mitigation discounts would result in a massive increase in premium costs.
This is an important development in the Florida home insurance market that all consumers should be following. Even slight changes to the mitigation discounts could cause massive increases in Florida home insurance premiums that will make the rate increases already approved look like small change!
Don't Forget to Ask Sellers About These Items When Purchasing a Florida Home
If you are a buying a home in Florida you can't ask enough questions about the home you are considering. You could be in for a nasty surprise if you don't do your homework.
Multiple Problems Ahead This Year for Florida Home Insurance
This year could bring more unwelcome news about your Florida homeowners insurance including rate increases, policy cancellations, fewer discounts, more failing companies, and continued difficulty finding coverage.
More Florida Home Insurance Companies Could Fail This Year
Many Florida home insurance companies are not in good financial condition at the present time.
