Cancelation of Homeowners Policies in Florida

[DooDiligence]

I just got a notice that my homeowners policy will be canceled on 30 June. I've been with Windstream ever since I had my home built & always pay the balance in full as soon as the bill arrives. The policy was supposed to be good through October.

Douchebags want to cancel right as we head into hurricane season, and apparently, they can.

They're not the only ones doing this.

www.insurancejournal.com/news/southeast/2021/05/12/613541.htm

Should be interesting with all the new builds and the influx of new residents.

[TwoCitiesCapital]

11 minutes ago, DooDiligence said:

I just got a notice that my homeowners policy will be canceled on 30 June. I've been with Windstream ever since I had my home built & always pay the balance in full as soon as the bill arrives. The policy was supposed to be good through October.

Douchebags want to cancel right as we head into hurricane season, and apparently, they can.

They're not the only ones doing this.

www.insurancejournal.com/news/southeast/2021/05/12/613541.htm

Should be interesting with all the new builds and the influx of new residents.

Not sure it's coincidental or not, but I have a family member in Missouri who was also just cancelled on after something like 17 years with the same company. Maybe this is more broad than just caution about hurricanes in Florida? 

For what it's worth, they were with State Farm. 

Edited May 20, 2021 by TwoCitiesCapital

[John Hjorth]

Jeff,

What do you think this really is? Hey, I'm not a US citizen, so what do I know. Here in the Northern Europe, I've heard about termination of policies  for reckles car drivers and motorcycle riders [typically youngsters], but this about a homeowners policy.

[DooDiligence]

3 minutes ago, John Hjorth said:

Jeff,

What do you think this really is? Hey, I'm not a US citizen, so what do I know. Here in the Northern Europe, I've heard about termination of policies  for reckles car drivers and motorcycle riders [typically youngsters], but this about a homeowners policy.

I've never filed a claim & always paid promptly. It's my understanding that they are having financial difficulties, as are other insurers in the state. I've found a new policy through Frontline. The premium is about 50% higher. I'd actually been planning on a similar increase at the next renewal date.

I'm still pissed that they can simply walk away from a contract like this.

[Spekulatius]

@DooDiligence what percentage of your home or structure value is your current premium?

I am surprised it is possible for them to cancel the insurance before the contract is up. Generally, I would recommend to go with a good insurance broker and get a couple of options.

 

FWIW, when i lived in CA, my homeowners insurance for my crappy ~350k value house was only $500 (no earthquake insurance and this way before the wildfires). Currently, I pay ~1.7k for my house that is worth a bit north of ~600k (in MA). Feels a bit high and I want to investigate options upon renewal. Again I never had claim in 20 years of owning homes.

 

We certainly have a hard market, insurance rates have been creeping up.

Edited May 20, 2021 by Spekulatius

[BG2008]

Insurance Costs Threaten Florida Real-Estate Boom

https://www.wsj.com/articles/insurance-costs-threaten-florida-real-estate-boom-11619343002

MIAMI—Florida’s property-insurance market is in trouble, as mounting carrier losses and rising premiums threaten the state’s booming real-estate market, according to insurance executives and industry analysts.

Longtime homeowners are getting socked with double-digit rate increases or notices that their policies won’t be renewed. Out-of-state home buyers who have flocked to Florida during the pandemic are experiencing sticker shock. Insurers that are swimming in red ink are cutting back coverage in certain geographic areas to shore up their finances.

 

[rkbabang]

1 hour ago, Spekulatius said:

@DooDiligence what percentage of your home or structure value is your current premium?

I am surprised it is possible for them to cancel the insurance before the contract is up. Generally, I would recommend to go with a good insurance broker and get a couple of options.

 

FWIW, when i lived in CA, my homeowners insurance for my crappy ~350k value house was only $500 (no earthquake insurance and this way before the wildfires). Currently, I pay ~1.7k for my house that is worth a bit north of ~600k (in MA). Feels a bit high and I want to investigate options upon renewal. Again I never had claim in 20 years of owning homes.

 

We certainly have a hard market, insurance rates have been creeping up.

My house is in that ball park, or was until recently zillow puts it in the 7's now, and not too far away from yours (although across the border in NH) and I pay $1.4k.  So you might be paying a little too much, unless prices are different from NH to MA for some reason.   I'm with Safety Insurance, which is based in Boston, I used them when I lived in MA as well 10+ years ago.

[DooDiligence]

1 hour ago, Spekulatius said:

@DooDiligence what percentage of your home or structure value is your current premium?

I am surprised it is possible for them to cancel the insurance before the contract is up. Generally, I would recommend to go with a good insurance broker and get a couple of options.

 

FWIW, when i lived in CA, my homeowners insurance for my crappy ~350k value house was only $500 (no earthquake insurance and this way before the wildfires). Currently, I pay ~1.7k for my house that is worth a bit north of ~600k (in MA). Feels a bit high and I want to investigate options upon renewal. Again I never had claim in 20 years of owning homes.

 

We certainly have a hard market, insurance rates have been creeping up.

$1,425 for a home that Zillow values at $380K. No word on the flood policy, which is also with Windstream.

I expected this years October renewal to have a significant increase. It’s insulting to get canceled going into storm season.

[boilermaker75]

We had a sump pump fail about 20 years ago and made a claim. Now we cannot get a policy for ground water flooding for our house with any insurer.

Two years ago our daughter's condo was broken into, many things trashed, and some things stolen. She had a security system but they had her on the phone for over 5 minutes before they called the police, so he got away. When we inquired about a claim we learned that if she made a claim she would not be insurable for burglary with any insurer. The security company admitted their agent screwed up waiting so long to call the police. Our attorney said alarm company contracts almost universally disclaim any liability for damages related to theft even it it is their fault. 

When you make a claim you are put in the CLUE (Comprehensive Loss Underwriting Exchange) data base. So they all see your history when you apply for insurance.

[Spekulatius]

3 hours ago, rkbabang said:

My house is in that ball park, or was until recently zillow puts it in the 7's now, and not too far away from yours (although across the border in NH) and I pay $1.4k.  So you might be paying a little too much, unless prices are different from NH to MA for some reason.   I'm with Safety Insurance, which is based in Boston, I used them when I lived in MA as well 10+ years ago.

Thanks. I am with an insurance broker who gave me a good enough quote a few years ago, but then rates started to creep up. I suspect then they just auto renew and don’t really look at the price until you ask them too (which I just did).

[boilermaker75]

11 hours ago, Spekulatius said:

Thanks. I am with an insurance broker who gave me a good enough quote a few years ago, but then rates started to creep up. I suspect then they just auto renew and don’t really look at the price until you ask them too (which I just did).

We had a homeowners policy with Liberty that was set up through GEICO. Same thing happened, the rates crept up to where we finally realized we had to shop around. About 6 months ago my wife contacted GEICO and they got her several quotes. We are now with Travelers for about 2/3 the cost for essentially the same coverage. 

[Spekulatius]

5 minutes ago, boilermaker75 said:

We had a homeowners policy with Liberty that was set up through GEICO. Same thing happened, the rates crept up to where we finally realized we had to shop around. About 6 months ago my wife contacted GEICO and they got her several quotes. We are now with Travelers for about 2/3 the cost for essentially the same coverage. 

Yes, i am going through the same process right now and told my insurance broker to shop us around. FWIW, we have homeowners, 2 cars and umbrella all with the same company and I would jump ship with all of them.

 

@rkbabang gave me a good triangulation point (he lives almost in the same area) that tells me I can do better.

Also, related, I tried $LMND a few days ago, because it is supposed to be so easy. Went through a bunch of questions with them, which took a while, but in the end their AI decided our house is no bid, because the fire department is not up to their standards.

I did get a quote from Liberty Mutual after going through their online questionnaire, that was cheaper, but those are nonbinding estimates (teaser) and the real quote is almost always more expensive when you follow through with it.

I will now wait what my broker comes up with. If they cant come up with something better, I try another broker.

 

Now, I have totally derailed @DooDiligence thread.

[DooDiligence]

7 minutes ago, Spekulatius said:

Yes, i am going through the same process right now and told my insurance broker to shop us around. FWIW, we have homeowners, 2 cars and umbrella all with the same company and I would jump ship with all of them.

 

@rkbabang gave me a good triangulation point (he lives almost in the same area) that tells me I can do better.

Also, related, I tried $LMND a few days ago, because it is supposed to be so easy. Went through a bunch of questions with them, which took a while, but in the end their AI decided our house is no bid, because the fire department is not up to their standards.

I did get a quote from Liberty Mutual after going through their online questionnaire, that was cheaper, but those are nonbinding estimates (teaser) and the real quote is almost always more expensive when you follow through with it.

I will now wait what my broker comes up with. If they cant come up with something better, I try another broker.

 

Now, I have totally derailed @DooDiligence thread.

Not at all. A lot of people are going through this process. Misery loves company.

[thepupil]

15 hours ago, DooDiligence said:

$1,425 for a home that Zillow values at $380K. No word on the flood policy, which is also with Windstream.

I expected this years October renewal to have a significant increase. It’s insulting to get canceled going into storm season.

whoa! that's cheap in florida. my parents pay about 1% of property value (couple miles inland on east coast)

[Cigarbutt]

^The Florida P+C re/insurance market has entered the vicinity of a perfect storm (!) as clouds have been gathering in the last few years. Many forces at work, some natural, others man-made and some 'collectively' self-inflicted.

The following Miami Herald article may help to digest the cancellation as the growing problem seems to be widespread.

Three more insurance carriers canceling Florida policies | Miami Herald

There are reasonable criteria allowing individuals and insurers to unilaterally cancel contracts and financial hardship is one of them but some unduly take advantage of the flexible definition of a contract.

Many factors at work and building up over a long time but litigation issues seem to be significant (there are so many embedded poor incentives at all levels with the insurer squeezed in the middle). Premium rates are expected to rise (perhaps much more if nature refuses to cooperate) and stabilization is to be expected when public funds will retain less and outside parties like BRK come in (similar to 2008) to submit reinsurance bids. It looks like 75% of the reinsurance money covering property losses in Florida comes from investors out of state.

Florida Citizens to seek $850m of cat bonds before 2021 hurricane season - Artemis.bm

Rising combined ratios, lower capital, to drive Florida reinsurance demand - Artemis.bm

Industry flags litigation as biggest issue facing Florida's re/insurance market - Reinsurance News

Disclosure: i like Florida for many reasons and may spend part of winters there when my perimeter becomes more limited.

[DooDiligence]

38 minutes ago, thepupil said:

whoa! that's cheap in florida. my parents pay about 1% of property value (couple miles inland on east coast)

Agreed, it's still cheap even with the increase. When I built the home, I was surprised at how low the premium was when compared to neighbors. My complaint is that this cancelation is happening right as we enter storm season. It smacks of douchery.

Does your parents home have a wind mitigation system for window & door protection? I get a "wind loss reduction credit" of $2254.

www.kin.com/faq/whats-windstorm-mitigation

Edited May 21, 2021 by DooDiligence

[thepupil]

hmmm, I do not know and will look into it. It was top of the line (all poured concrete (no wood or block), all impact glass, overengineered) when they built it, but that was 20 years ago. 

in maryland, I pay a hilariously low 9 basis points / year relative to home value. It seems so low i regularly check to make sure it's adequate replacement costs and all that stuff. Through GEICO, but actually Homesite. 

Edited May 21, 2021 by thepupil

[LongHaul]

Buffett may be on the other side of you (indirectly) if these insurers are buying expensive reinsurance from Berkshire.  

You might want to consider self insuring (or maximizing your deductible).  If you are careful, the chance of having a fire or water problem is very low.   

1.  Even in a total loss the land will have value even if you home burns to the ground.

2.  Insurance is generally transferring risk for a price.  If the price is too high (and you are at most an average risk) then it is a long term bad deal.  

You might get back 50 cents on the dollar in the long run.  Here are some old notes FYI. 

 

Residential Fires (Home Insurance related)

• http://www.usfa.fema.gov/downloads/pdf/statistics/res_bldg_fire_estimates.pdf

• 374k home fires in 2012 ~32bps if 115m homes.  1/300 per year (33 bps).

• $19k average loss

I would also recommend the below washing machine hose.  The typical ones are low quality and more likely to spring a bad leak.

Whirlpool 8212487RP 5-Feet Nylon Braid Washer Fill Hose, 2-Pack

Edited May 21, 2021 by LongHaul

[rkbabang]

With lumber prices the way they are, I wouldn't be surprised if everyone's home insurance rates go way up this year.  The re-build value has to be insane if you had to buy lumber now.

 

[gfp]

My friends who live directly on the Atlantic ocean in Florida have self-insured for decades.  I believe they have a scheduled item policy for individual artworks and definitely umbrella/liability but nothing for the residence itself hazard / flood / hurricanes.

But of course most people own real estate with mortgage financing because it is so attractive - which definitely rules out self insuring for hazard or flood (if required).

[DooDiligence]

I own the home outright. Does “self insure” simply mean don’t pay anyone for insurance? The umbrella would cover liability, yes?

I just ran a report on quickbooks & I’ve paid out over $15k in premiums since 2013 for zero return. You may be on to something.

OTOH, I’m generally a contrarian indicator and if I forgo a new policy, you can bet my roof will get torn off by a hurricane this year.

[rkbabang]

14 minutes ago, DooDiligence said:

I own the home outright. Does “self insure” simply mean don’t pay anyone for insurance? The umbrella would cover liability, yes?

I just ran a report on quickbooks & I’ve paid out over $15k in premiums since 2013 for zero return. You may be on to something.

OTOH, I’m generally a contrarian indicator and if I forgo a new policy, you can bet my roof will get torn off by a hurricane this year.

No insurance seems dangerous to me.  A house about 5 houses from mine on the next street over just got gutted by fire this morning.  If something like that happened without insurance you'd lose everything.  I just walked by it with my dog, all the windows are gone and black scorch marks all around them.  The fire department pumped a ton of water from a nearby pond into the house to put it out.  I'm sure everything inside is lost

and the house will need to be gutted completely down to the studs (at the very least). Not fun.

That said, my parents own a home on the water and insurance is so expensive that they don't have any.  They've been there for 20 years and have been just fine.  So, it's an option and you save money if nothing ever happens.  I'm keeping my insurance though.

 

[DooDiligence]

2 minutes ago, rkbabang said:

No insurance seems dangerous to me.  A house about 5 houses from mine on the next street over just got gutted by fire this morning.  If something like that happened without insurance you'd lose everything.  I just walked by it with my dog, all the windows are gone and black scorch marks all around them.  The fire department pumped a ton of water from a nearby pond into the house to put it out.  I'm sure everything inside is lost

and the house will need to be gutted completely down to the studs (at the very least). Not fun.

That said, my parents own a home on the water and insurance is so expensive that they don't have any.  They've been there for 20 years and have been just fine.  So, it's an option and you save money if nothing ever happens.  I'm keeping my insurance though.

 

I agree. $1,400 is cheap. I’ll keep coverage. I’m the only person on my street who didn’t file a claim after Sally (last year). Most of the neighbors have new roofs now. If I dumped coverage, it would likely be the opposite this year. I’m ordinarily an outrageous optimist but…

[LongHaul]

3 hours ago, DooDiligence said:

I own the home outright. Does “self insure” simply mean don’t pay anyone for insurance? The umbrella would cover liability, yes?

I just ran a report on quickbooks & I’ve paid out over $15k in premiums since 2013 for zero return. You may be on to something.

OTOH, I’m generally a contrarian indicator and if I forgo a new policy, you can bet my roof will get torn off by a hurricane this year.

If you self insure you don't pay any insurance but then pay for any losses yourself.   The story RKABANG posted is what can happen - but it is a low probability event, especially if you are careful.  Insurance companies make money over the long run, even with all their underwriting expenses, fraud, losses, etc.  

Actually if you had invested the $15k you would probably have significantly more - remember that is your float.  

The other thing people often don't think about is the credit risk and unwillingness to pay risk.  If a big hurricane hits Miami will you insurance company go broke? Sometimes they just don't want to pay either and you have to sue them.  

It depends on the factors of your personal situation but best not to make the decision based on fear and other emotions.