Homeowners Insurance Lowdown

Know Your Insurance

By Priya Jestin, Staff Writer

If you’ve taken a homeowners insurance, you definitely care about your home and want to ensure that you don’t have to suffer if disaster strikes. But what you may not realize is that it isn’t enough to just take a policy. That is only the first step. You must check your homeowners insurance policy regularly to ensure that you haven’t missed out on any technicality which could cause a lot of heartache later on.

If you have expensive jewelry, art, antiques, collectibles, guns, etc call your insurance agent & get them listed on your homeowners policy. Don’t forget to document them separately. Take pictures of every area of your home including the furniture. This will help ensure the legitimacy of your claim.

Keep receipts or proof of the new or upgraded appliances and furniture in your home. Never keep important records like insurance policies, an inventory of your home contents, pictures of your home (exterior & interior), financial documents, and receipts in your home. A bank safety deposit box is always safer. And most importantly, never do business with an insurance company you have never heard of before.

Florida Homeowners’ Survey

A survey of 1,000 homeowners in Florida conducted by the Attorneys’ Title Insurance Fund, title insurance underwriter and title information provider, has thrown up the following statistics:

• As much as 58 percent of those surveyed felt that their homes will become more valuable over the course of the next 12 months.
• Around 70 percent felt that if people did not own homes, it was mostly because they could not afford the expense.
• Nearly 45 percent thought that the present period was a good time to buy real estate in Broward County (39 percent) and Tampa (42 percent).
• At least 78 percent say they have no short-term plans to buy a house or condo.
• Hurricane worries were lurking in the minds of 43 percent of those surveyed.
• Among the other concerns regarding living arrangements were the impact of the housing bubble (16 percent), high mortgage interest rates (13 percent), depreciating values of homes (5 percent), and falling prey to real estate scams (1 percent).

Flood insurance, FEMA flood maps - News

Reading about flooding and home insurance lately the first thought I had was - "Do I need homeowners insurance or just flood insurance for my home?" The article points out that Ninety percent of all natural disasters in the U.S. involve flooding. Ninety-nine percent of the homeowners policies do not cover flood damage to the home or the contents.

Flood insurance numbers: The maximum amount per home of flood insurance that a homeowner can buy under the N.F.I.P. is $250,000 but $250,000 is not always enough. The owner of the larger homes can buy an excess flood policy to cover the full amount. The average cost of policies countrywide as of June 2005 was $446.00. The cost of the cheapest type of flood policy is $112.

FEMA has posted new satellite-generated flood maps post Katrina for Jefferson, Orleans, upper Plaquemines and St. Bernard parishes online. Diana Herrera, a FEMA natural hazards program specialist, said the maps were hand-delivered to the four parishes before being posted online. FEMA planned no public notice of the new resource on its Web site.

Maps appeared online without any publicity but why was this so? Maybe because it’s not going to be very helpful for regular homeowners - "They're useful for land surveyors and city planners and code enforcement agencies, but the average person isn't going to know what to make of it," said Michael Centineo, New Orleans' safety and permits director. "It's hard to explain to them that unless they get a survey, there's no way to know how high they need to build."

Now moving on to California - The Federal Emergency Management Agency is slated to release a new set of flood maps in early October that could force Central Valley cities to spend millions on repairing local levees to keep every homeowner in town from having to spend roughly $1,200 a year on mandatory flood insurance. This is making things uncomfortable for lawmakers here as they are facing elections and they have promptly asked FEMA to delay the release as it could influence the election result.

Florida Losing Appeal

Florida is losing its appeal as the ideal retirement destination for the elderly after repeated battering from hurricanes and tropical storms. Adding insult to injury is the fact that home owners are unable to find suitable insurance options with most of the private insurance companies closing shop, unable to hold their heads above water in the wake of hurricanes Katrina and Rita.

Home owners in the area are left with no alternative but to depend on Citizens Property Insurance Corporation, the state insurer, which, according to the law is mandated to charge more in order to stay noncompetitive. While Citizens also went into the red, it was bailed out by state surpluses from the Legislature. The insurer, which was the second-largest pre-Katrina and Rita, is all set to become the biggest insurance agency in Florida, with a total of 1.2 million policies and counting.

Private insurers are also hiking their rates, according to the Florida Office of Insurance Regulation, which said that State Farm, a privately owned insurance agency, had sought an increase of 74 percent on its insurance rates.

Politicians have promised to address the issue of homeowners’ insurance in their campaign promises, the Legislature has put aside $250 million for property owners to strengthen their homes, but these measures are not enough to stop the exodus from Florida.

Poll Results Against State-Run Agency

With most privately-owned insurance agencies closing shop after the high payouts following hurricanes Katrina and Rita, the state-run Citizens Property Insurance Corp. is all set to become the largest property insurance provider in Florida. At a time when most insurers are hiking premiums to exorbitant levels in order to keep their heads above water, Citizens is adding 40,000 new customers every month to its already wide base of more than 850,000 policyholders.

But the insurer seems to be winning no prizes in the popularity department; according to a survey conducted by the Orlando Business Journal Business Pulse, 73 percent of the 238 respondents surveyed said that the company should not be run by the state, while only 20 percent were in favor of it. Participants offered suggestions to create incentives like high premiums that would bring back insurance companies to the state.

Fumbling FEMA pays man $2,000 for damaged property… in a cemetery

This was one story that just couldn’t be missed. I don’t know if you guys know about this already, but boy, was I shocked when I heard this. These guys went on a shopping spree and their shopping list included diamonds, fireworks, a $200 bottle of champagne at Hooters, $300 worth of "Girls Gone Wild" videos, more than two months at a hotel in Hawaii, an all-inclusive, one-week Caribbean vacation and five season tickets to New Orleans Saints football! Are we talking about some rich, spoilt brat? No, about the people who were supposed to be displaced by hurricanes Katrina and Rita!

A recent audit by the Government Accountability Office (GAO)shows that the debit cards that were given to people displaced by the storms were used to buy all of the above. And one person even used the card for… a sex-change operation! And guess how much this disaster relief cost the government. The GAO found that up to $1.4 billion in disaster relief payments (nearly a quarter of the total amount paid out) by the Federal Emergency Management Agency (FEMA) were improper and potentially fraudulent.

The main reason for this was that the recipients provided incomplete or incorrect information when they registered for assistance. So far, FEMA said it has found more than 1,500 cases of potential fraud after the hurricanes. And a GAO study that was provided to CNN showed that it only got worse – FEMA provided housing assistance to people who were not displaced, including at least 1,000 prison inmates.

According to investigators, over 15 percent of the disaster relief payments that were made by FEMA, went to people who submitted invalid registrations. According to the CNN report, in one case FEMA paid nearly $2,360 to a man whose allegedly damaged property was in a cemetery.

‘Homeowners Insurance Rates Unfair’

As forecasters predict a more active Atlantic hurricane season this year, insurance companies have lost no time to up their charges. Consequently, consumers in some areas may notice a rise in insurance premiums. Some people are refusing to take this arbitrary hike lying down. Massachusetts’s state Attorney General Tom Reilly is one such person.

According to Reilly, the insurance industry is using an unexplained model for determining future hurricanes. This allows them to overcharge for expenses, and inflate its numbers to justify a proposed 12.9 percent statewide rate hike. This includes a 25 percent increase in the cost of homeowner insurance on Cape Cod. Reilly filed his final brief with the Division of Insurance, as part of the rate setting case for the FAIR Plan, operated by the Massachusetts Property Insurance Underwriting Association (MPIUA). Consumeraffairs.com reports:

Reilly is recommending no overall rate increase statewide in 2006 - including rate decreases for homeowners in many communities - and a slight increase, 1.2 percent, for Cape Cod homeowners.

Read more: Homeowners Insurance Rates Unfair, Massachusetts Charges

Homeowners insurance bill cannot halt rising rates

In Florida, you just cannot escape the rising property insurance rates. Despite Florida lawmakers doing everything they could to better the condition of the debt-ridden state insurance fund, things seem to have gotten worse. They even offered incentives to revive the private insurance market and attempt to ease rising premium costs, but to no avail. So why haven’t the lawmakers been able to bring the situation under control?

The main reasons for the rise are the frequency of the hurricanes and the rising costs of construction. Add to this the over $2 billion in deficits in Citizens Property Insurance, the state-run insurer of last resort. This has only added to insurance costs across the state since all property policyholders are assessed to pay off the debt. Theledger.com reports:

In Miami Beach, Rep. Dan Gelber, a Democrat, now pays $9,242 for his Citizens coverage for what he says is a relatively modest home. He will pay an additional $4,242 representing a 45 percent premium rate that Citizens is now seeking. He also has to pay more than $2,300 in assessments to cover Citizen deficits that have occurred over the last two years -- the result of eight hurricanes hitting the state in that period.

Read more: Homeowners Insurance Bill Won't Prevent a Rise in Rates

New Orleans homeowners may pay 52% more for insurance

If you live in New Orleans and have a homeowners’ insurance policy from Allstate Insurance Co, then get ready to pay almost 52 percent more for your insurance. Under a change approved by a majority vote of Louisiana Insurance Rating Commission, the change in insurance rates will be effective from June.

Allstate is Louisiana’s second-largest homeowners insurance company and has over 200,000 policyholders. According to the company, the increase was mandated because this year, there could be another busy storm season. Another reason was that the cost of reinsurance, the extra insurance carried by insurance companies to help them pay on catastrophe claims, is rising.

Allstate seems to have learnt some bitter lessons from last year’s storm and is probably not willing to take any risks this time around. The company did not have any reinsurance for Louisiana when Hurricanes Katrina and Rita hit the state. Following last year’s record hurricane season, the company bought a one-year nationwide reinsurance policy for all catastrophes.

However, not everyone is going to have to face the sudden price hike. Allstate policyholders in parts of the state such as Shreveport and Monroe will see decreases that will range from 13 percent to 16 percent. However, the exact amount of increase or decrease will depend on many other factors as well. The location of a home, its type of construction, its replacement value and the size of the policy's deductible are all factors that will be taken into consideration by the company when deciding the rate change.

Have you been invited to the insurers’ party?

You probably don’t stay anywhere close to the Gulf Coast and the closest you got to the hurricanes, that ravaged the states along the coast, was through your telly. So why do you have to scramble around to get a homeowners insurance at a reasonable rate? Because the insurance companies are still reeling from the losses they incurred during the last bout of hurricanes and are no longer ready to face any additional losses. That probably still does not answer your question.

Actually, what we are experiencing is something of a trickle-down effect. But if I am to make myself any clearer, I will have to start at the beginning. During last year’s hurricanes, major insurers in the country suffered losses to the tune of $56 billion. They are now no longer ready to face such a huge loss. So what do they do? Drop policies or not writing new ones in coastal areas from Texas to Florida and up the Eastern Seaboard as far north as Massachusetts. In other words, they drop them like hot potatoes! They don’t want to handle the risk of fresh storms and the resulting losses. So, you are left to scramble around to find new coverage, often at higher cost. And guess what, some home insurers also are winning regulatory approval to raise premiums in states hit by hurricanes Katrina, Wilma and Rita – it’s something like getting legal approval to loot you.

And now that they’ve tasted blood, they don’t want to let go. So, rate increases are expected to spread far beyond coastal areas – you never know, a hurricane may hit these areas as well! And insurance companies are not without their cronies in this party. Reinsurance companies, who insure the insurers, have also begun charging sharply higher prices. They believe that hurricanes will become more frequent and more intense and hence the increased costs. So, the insurance companies now complain that they have no choice but to recoup these added costs from consumers.

Unbelievably atrocious? You bet. So, what do you plan to do about it?

Expensive Oklahoma

A recent study shows Oklahoma is the 3rd most expensive state in the country for home insurance. However, according to some, the high cost of insurance is worth it. Kotv.com reports:

“People are silly to go through life without insurance." Wayne Garris should know, 2 years ago, a storm struck Tulsa and damaged his mother-in-law's house. "And it put a hole about like that through it." Since then, the home has been repaired. "They fixed it and re-roofed the whole house and it's in tip-top shape now."

Read more: Price Of Homeowners Insurance Is Going Up

Hurricane losses force insurers to drop Florida policies

You begin to wonder if it is your fault that a hurricane happens. I mean there you are with a proper homeowners insurance covering your home and everything in it. If you live in hurricane country, you are especially careful to ensure that your home is insured. Last year’s hurricanes Katrina and Wilma left nothing to imagination as to the destructive powers of hurricanes.

So, there you are, a diligent house owner who does not grudge his regular payments. And then, when your policy comes up for renewal, you realize that your policy has been dropped. You’re not alone in your predicament. Around 140,000 Floridians will soon be losing their homeowners insurance as one more insurer decides to drop Florida policies unable to bear hurricane losses. Atlantic Preferred Insurance, a subsidiary of Tampa-based Poe Financial Group, will begin dropping its policies July 13th as they come up for renewal. The company claims that it needed to lure investors to help cover a $2 billion hit from claims in the 2004 and 2005 hurricane seasons.

Homeowners should know about Flood Insurance

It was reported that more than 28,000 flood-insurance claims were made during the 2004 hurricane season. Around $1.4 billion were paid to the claimants. As floods have been more frequent in the United States in the past few years, homeowners should think about it seriously. Many homeowners do not carry separate flood insurance as they think that it is covered under their homeowner policy. But such misconception arises, as they do not read their policies carefully.

Homeowner insurance only covers win-blown rain or water damage caused by plumbing malfunctions. They should read the term and conditions mentioned in the homeowners insurance policy to avoid any confusion. Homeowners can take the benefits of flood insurance even though they have homeowners insurance policy. investors.com reports:

Many homeowners also mistakenly believe that flood damage will be covered by federal disaster assistance, but these monies normally take the form of loans (not grants) and are only available if the president formally declares a disaster. Less than 10% of all weather emergencies in the U.S. are declared federal disasters.

Read More: What all homeowners need to know about flood insurance