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Insuring Your Home in the Sunshine State
If you are buying a home in Florida, be sure to allow plenty of time to find insurance coverage. The Sunshine State makes homeowners jump through many hoops in order to get coverage, mainly because of its relatively higher risk of loss from natural disasters.
For example, Florida has a state-run insurance pool that can write wind insurance. The pool was designed to be an insurer of last resort, but many private insurers have been excluding wind coverage for homeowners who are eligible for coverage through the pool. And now the pool is pushing back.
Although it had been providing wind insurance for homes up to $1 million in value, it is gradually cutting the top limit of the homes eligible for coverage. It also has informed some existing policyholders that it has established a clearinghouse to determine if wind coverage is available for that homeowner in the private market. If coverage is available for a premium that is equal to or less than the wind pool’s premium, the pool will not renew the policy.
Finally, it also is informing policyholders that if there is a major disaster and the pool cannot cover its claims, policyholders might be assessed up to 45 percent of the cost of their annual premium; such assessments are much lower or nonexistent with private insurers, which have much higher capitalization requirements.
This recent action by the wind pool is only the latest roadblock to finding property coverage in Florida. For some time, Florida homeowners have been required to have both wind and flood inspections and provide certificates detailing their home’s vulnerability to damage from wind and flooding, such as would be expected in a hurricane.
Many private insurers have begun to ration coverage in Florida by, for example, requiring that policyholders be paying a certain amount of premium in non-Florida coverage before they are eligible to buy coverage in Florida.
Insurers are reacting in large part to the recent explosion in the number of people who want to buy in Florida. The movement of baby boomers into retirement, coupled with the lack of significant hurricane activity over the last several years, has made insurers worried about having too much loss exposure when the next hurricane hits.
The bottom line is that it can take extra time to place coverage in Florida. So if you are planning to buy either a permanent home or a vacation home, please let us know the address of any home in which you are seriously interested. That way we can start looking at coverage options – and you can start enjoying your place in the sun.
We are always happy to talk with you about this or any other insurance need. Just contact us at 847-572-0820 or firstname.lastname@example.org.