Windstorm Insurance Basics

[wjs3]

Hi:

My wife and I are considering purchasing a house in South Fla and have been warned about insurance by a lot of folks.

Specifically I have a friend who really talked down windstorm insurance. Is there anyone here who is experienced with the Florida Windstorm Insurance or can point me in the right direction to research it?

His comments were:

The premium is very high
The deductible is very high
Much basic windstorm "stuff"--fencing, landscaping, etc--is not covered...

So the policy is of little value, if you are comfortable with the risk.

If anyone can help me get better educated on this--as many of you live with this and I don't--I would appreciate it.

Thanks

WJS3

[Alladin]

It’s not just south Florida. The entire state of Florida is dealing with a major insurance crisis all the way from Key West in the south to Jacksonville in the northeast and Pensacola in the northwest. The reason is simple. Seven of the 10 most expensive hurricanes in U.S. history occurred during the 14 months from August 2004 until October 2005. Nine of the 10 affected Florida!

The other big problem is that coastal counties in Florida have encouraged the construction of residential and commercial property in high hazard (storm surge) areas and the state government has created an insurance company that sells insurance to these high risk property owners.

Low risk property owners have to pay higher rates on their insurance to subsidize the high risk owners. Also, all home owners with property insurance have to pay a special assessment to help bail out the high risk people that have Citizens Property Insurance (the government created insurance company). However, Citizens customers don’t pay the special assessment.

Even better, all Florida car owners now pay a 1% surcharge on their auto insurance to help bail out the high risk property owners as well.

I encourage you to move to Florida and help pay off a hurricane debt incurred by high risk, poor planning and failed government.

[wjs3]

Well...

Thanks for the information. As background, I grew up in South Florida and have family all over the state, so am aware of the political issues. And, from this board (and living there) I am more than aware of the beating that the state has taken in recent years (and in the more distant past) from Hurricanes.

Nevertheless...

Do you or does anyone else have any comments on the price of the premiums, the deductible, and the quality of the coverage? Website for it?

I understand that mortgage companies are compelling home owners to buy it. True?

Thanks.

WJS3

[DanKellFla]

Do you or does anyone else have any comments on the price of the premiums, the deductible, and the quality of the coverage? Website for it?

I understand that mortgage companies are compelling home owners to buy it. True?

Thanks.

WJS3

I have no idea about a website.

If you have a mortgage, you are required to have insurance. The practice is called, "Forced Placed." I just ran into a situation where the Forced Placed insurance was cheaper than anything I could find. It was brutal, but about 2 months later I managed to find something for half the price. At least you are being proactive. If you actually buy a place try to get something that has been built with shutters originally. I don't remember exactly when, but around 2002 all homes were built to a newer code which required shutters of some sort. That and living west of I-95 helps. Essentially, the insurance is expensive and the coverage is lousy. You can easily spend $3,000 a year on insurance for a moderatly sized 4 bedroom house.

[wjs3]

That helps a great deal. Thank you.

Why do you say the coverage is lousy? What's bad about it other than the cost?

Thanks a ton!

WJS3

[Alladin]

The availability of insurance and premium price depends largely upon the location and the type/age/construction of the house. For example, in the two county area in which I live, only one company is writing new policies (other than Citizens). Their premium is about 2% of the house value. The premium on a $250,000 house will cost you $5,000 a year with a 2% windstorm deductible and an AOP (all other perils) deductible of $1,000. That’s about the best you can do in this area (northwest Florida).

If you were to move to Pinellas County Florida, then your costs would be higher as would your deductibles. Dade and Broward counties are pretty good for new houses (built to the latest codes) but for older houses a new policy will be expensive and provide very limited coverage.

If your house is more than 30 years old (unless it has had major renovations of plumbing, electrical, etc.) it will cost much more to get a new insurance policy.

If your house is within five miles of the coast (or any major body of water) it will cost much more to insure.

I think what you need to do first is find out which insurance companies are writing new polices in the county to which you intend to move. Contact a couple of independent insurance agents in that county and ask them which companies are selling new policies.

Oh yes, the mortage company will require the property to be fully insured. If you don't buy insurance, they will...and at a much higher price!

[DanKellFla]

Oh yes, the mortage company will require the property to be fully insured. If you don't buy insurance, they will...and at a much higher price!

Alladin, in this crazy situation we are in, I was actually forced placed because I couldn't find anybody to insure me at a better price. It was resolved a couple of months later, but I think that is one odd annecdote for you. FYI, I am in Palm Beach County.