The recent Florida property insurance law passed by the Florida Legislature and signed by Governor Charlie Crist was an important step towards improving the financial stability of the Florida insurance system. It allows Florida's state run insurance company - Citizens Property Insurance Corporation to start raising its rates as much as 10% per year starting in 2010 as part of a multi-year process to move the company towards more actuarially sound rates. Private Florida home insurance companies will also be able to get rate increases in the future as they purchase more reinsurance from the private market instead of from the Florida Hurricane Catastrophe Fund.
The good news is that if Florida can continue the recent history of limited hurricane activity, the entire Florida insurance system should become stronger financially in the coming years - something that has to happen to improve the chances that most Florida home insurance companies can make good on their promise to pay your hurricane claim quickly and fairly.
The bad news is the fact that all of us will be facing up to a 10% increase in Florida homeowner insurance rates. A rate increase of 10% might not sound like much of an increase in other states but in Florida the situation is much different. These increases come on the heels of significant rate increases that followed the 2004/2005 hurricanes. Even before the coming 10% increase, consumers in Florida were already paying the highest home insurance rates in the country.
The rate increases could not be coming at a worse time. To begin with, Florida is in the middle of a financial crisis just like the rest of the country with depressed real estate, bankruptcies, foreclosure, and increases in unemployment. These rate increases are going to start happening at the exact same time that State Farm Florida will start cancelling up to 30,000 policies per month as they start exiting the Florida property insurance market. Our subscribers who presently have their insurance with State Farm are telling us that finding comparable coverage with another Florida home insurance company may cost them up to 200% more after they lose their coverage with State Farm.
So what is the bottom line for you as a Florida homeowner insurance consumer as we move through this challenging period?
First you have to understand that while there are only about 40 Florida home insurance companies still writing new business, if you shop around you have a good chance of finding 5-10 companies that are still willing to cover your home - even if it is older or close to the coast.
It is very important for you to shop your Florida home insurance policy with more than one independent agent - someone who represents multiple Florida homeowner insurance companies looking for your business. Contacting multiple independent agent will ensure that you are able to get quotes from all the companies in your county who want to cover your home - not just the companies represented by a single agent.
Also, you have to do due diligence and research on all of the Florida homeowners insurance companies that you are getting quotes from. The 40 companies still writing new business are very different in terms of their size, financial stability, number of years of experience in the business, and customer service history. It is essential that you work with your agent to make sure that you understand how each company stacks up in each of these areas.
As you narrow the field of companies, work with multiple independent Florida insurance agents to make sure that you are getting quotes from all the companies in your county who want to cover homes like yours. As you evaluate the quotes, don't buy the Florida insurance for your home simply on price. Find the right balance between strong financials, good customer service, and price. After all, paying a low price for Florida home insurance isn't really a bargain if the company you pick pays slowly and won't pay the full amount that you need to repair the damage to your home after a Florida hurricane?
There is no doubt that the recently approved Florida home insurance increases are going to be difficult to absorb and the timing couldn't be worse. However, if you take the time to learn more about the available market and the companies willing to cover your home you might even be able to hold your Florida home insurance costs flat while everyone else pays a significant increase. Your research can save you thousands!
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Michael Letcher is a Fortune 500 executive and a licensed CPA. His on-line buyers guide can help you find affordable
Florida insurance. Find out the secrets to low cost Florida insurance in his free newsletter at =>
http://www.homeinsurancebuyers.org
