The ins and outs of any type of insurance can be very confusing and intimidating for newcomers and even those who have had personal experience with all types of insurance. Though many move to Florida because it is the sunshine state that is known for low costs of living, they soon encounter the reality check that is acquiring homeowner’s insurance in this state. From our fifteen years of experience, we have developed expertise in guiding all of our clients through every type of question and concern they may have. This blog post highlights the three main questions we frequently encounter in regards to homeowners and car insurance.
1.) Why is insurance in Florida so much higher than insurance in other states?
Although Florida is the beautiful sunshine state that 21.3 million people call home, there are some extra costs required to live here. One of them being that homeowners actually pay double the national average for homeowner’s insurance. Therefore, at the Webb Insurance Group, we get the question of “why” more frequently than anything else. Seeing as this double in the average price has come about within the last decade, we have analyzed the top causes of this spike. Read on for the most prominent causes…
Natural Disasters
The cost of homeowner’s insurance depends on a variety of factors, but in Florida, risk is one main determinant because the state ranks #5 in the US for natural disaster risks. If you have lived in Florida for one year’s time, or are close to anyone who has, you know the panic which ensues during mid-August through October. This time of year is called hurricane season because hurricanes begin to form in the Atlantic ocean. Even though they are monitored by experts, it is extremely difficult to determine and pinpoint their exact path. The hurricanes could hit many of the east coast and southern coast states, but Florida happens to be directly in the middle of all of those possible targets.
Aside from the catastrophes that are hurricanes, Florida is also at incredibly high risk for sinkholes, wildfires, tornadoes, and other extreme tropical storms. With all of these possible disasters, Florida is the most expensive state in which to buy home insurance with the average yearly premium being around $1,993 compared to the $1,173 national average cost. That makes it almost double the cost of certain states and could be even more dependent on the value of your assets. Also, if you are an extra cautious individual, you may want to purchase flood insurance to provide coverage for flood damage that your homeowner’s insurance will not cover.
Reinsurance
Little do people know, Florida’s insurance companies almost always purchase “reinsurance” to protect themselves against high damage claims, making your homeowner’s insurance premium even higher. With all of these aspects of uncertainty over time, the state regulators and politicians had to step in and establish an increase of 18.7% in homeowner’s insurance rates and cut voluntary discounts. This large political step was made in part of the shocking wake up call introduced by the 2010 Hurricane Model. In essence, this model developed by Florida State University and the company Risk Management Solutions estimated wind speed and predicted the damages hurricanes could cause. The insurance companies of Florida immediately realized the immense risk they would face in the event of a hurricane and they knew they needed more reinsurance. Therefore, in 2011, regulators established a 15% increase in premiums to cover the insurance company’s reinsurance costs which still holds today.
2.) Why does the insurance company have to inspect my home?
Though a home inspection may be a very awkward part of the process to acquire home insurance, this actually helps keep your costs down. The insurance company must inspect your home so that they can be aware of the additional liabilities and thus manage their risks. Insurance companies are aware that much of the liabilities won’t be listed on your initial application so these inspections are just a way for them to avoid future potential losses.
One can almost always expect to be required to have a home inspection, but you are especially likely if you are a new customer, the home is older than the average, or certain structural replacements costs are difficult to verify. The insurance company may ask to do just an interior inspection, just an exterior inspection, but you can most likely expect them to do both. The key items that they will look for usually include:
- HVAC
- Plumbing systems
- Fire alarm
- Chimney
- Windows and doors
- Fire extinguishers
- Anti-theft devices
- Surrounding grounds
- Fencing
- Siding
- Roofing
- Gutters
Interestingly enough, these inspections don’t often occur before your policy begins, rather 30-90 days after its start date. Based on the results in a worst-case scenario, the insurance company could suspend your policy because your home is too risky to insure until you fix the mandatory issues that they indicated in the inspection. However, this inspection is actually more likely to benefit you because the inspector may be able to identify areas in which you actually qualify for discounts that you were previously unaware of. Depending on the provider, these discounts may include anything that provides significant additional safety and security for the home and its dwellers.
All in all, these inspections actually keep the cost of your insurance down and is a win-win for all. If you work with an insurance company that is known to conduct thorough inspections, they are more than likely receiving a discounted rate on their reinsurance, therefore, making your premium a bit lower.
3.) Why do I have to be on my roommate’s car insurance policy (rated or excluded) because we live together?
For those who have a close relationship with their roommate this small factor might make a lot of sense and for those roommates that aren’t very close this might seem unsettling. Don’t worry, it actually works out in your best interest to have your roommate on your insurance policy despite the circumstances, here is how:
Having your car insurance company up to date on whoever is living with you keeps your property safe and secure. Even though you and your roommate probably do not share a car or an insurance policy, they must be listed as a member of your household. This is because when you live with someone, no matter how careful, they may at times have access to your keys and car.
If you are the type of person who is okay with their roommate borrowing their car, then having them listed on your car insurance enables you both to be covered in an accident. If you neglect to list them on your policy and something happens, your insurance company has full rights to deny your claims or even cancel your policy.
So what about the roommates you do not want using your car? Listing them on your policy is just as important. However, you would list them as an “excluded driver” making them not covered to drive your vehicle. Yet, when you list them as so and then give them permission to use your car counterintuitively, they would be considered as driving without insurance and both of you could be held personally responsible for any damages. If you have a change of heart about who is allowed to drive your vehicle, you must first report that to your insurer or face some pretty hefty out of pocket costs if damages are incurred.
At the Webb Insurance Group, we know that it is critical for everyone to have options when it comes to their various insurance policies. Our team is proud to have over 15 years of experience and we have made it this far with such great reviews by providing our very best knowledge to every single prospective client. We also have a vast network of partners to help you in any time of need. Take a look at our website and give us a call today so that we can help protect your assets and continue to answer any unanswered questions. Partner up with us and get the proper protection you need and deserve.
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