If you are a Florida homeowner, you might feel the financial squeeze of an ongoing tough economy.  Fortunately, you are about to get a reprieve in terms of a slight reduction in the cost of your property insurance.   The reduced premium on your homeowners’ insurance is the result of a reduction in reinsurance costs.  Reinsurance is a supplemental layer of coverage that insurance carriers purchase to assist them in covering the cost of claims following a major disaster.  The objective of reinsurance is to mitigate the risks associated with the underwriting of insurance policies.

Homeowners should welcome the lower rate given that a report by the National Association of Insurance Commissioners concluded that homeowners’ insurance is more expensive in Florida than any other state.  The average cost of homeowners’ insurance in Florida was $1,933 in 2013, which is approximately double the national average. 

The extremely high cost of homeowners’ insurance in Florida is related to a number of factors according to insurance company insiders.  Because Florida residents face a higher risk from perils like hurricanes and tropical storms, the cost of homeowners’ insurance is comparatively expensive when compared to other states.  Another factor in the disproportionately high rates in Florida is the amount paid out in sinkhole claims.  Insurance industry experts also cite a rise in broken water pipes leading to water damage and flooding as contributing to the higher rate.    Ironically, flood insurance, which is not included in these estimates of the cost of homeowners’ insurance can add thousands of dollars to the annual cost of coverage to protect an individual’s home.

The reduction comes after Insurance Commissioner Kevin McCarty indicated in a January 2014 report that 30 large homeowners’ insurance carriers had received approval or submitted requests for downward rate adjustments of 2.4 to 9.2 percent.

The increase Florida homeowners have been paying toward the reinsurance fund is a 1.3 percent surcharge.  The premium was imposed in the wake of the 2004-2006 hurricane season that included a record number of hurricanes and tropical storms.  The eight storms during that two year period drained the reserve fund used to help private insurance carriers pay claims after a catastrophic disaster like a hurricane.  The Florida Hurricane Catastrophe Fund took out over $2.6 billion in loans to assist private insurance carriers in paying claims following Hurricane Wilma.  Although it was originally estimated that the surcharge would continue through July 2016, homeowners get an early financial reprieve from the cost that was referred to by many as the “hurricane tax”.

While a reduced annual premium is probably a welcome surprise for many homeowners in Florida, your coverage is only as good as your homeowners’ insurance carrier’s claims practices.  Many homeowners’ find that their insurance company stalls payment, refuses to pay valid claims or offers ludicrous settlements.  If your home has been damaged by a hurricane or another peril, my law firm helps homeowners who are struggling to get their insurance carrier to properly handle their claim. 

You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].

J.P. Gonzalez-Sirgo
J.P. Gonzalez-Sirgo, P.A.
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