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Insurance Rates On The Rise

Source: SunSentinel

South Florida homeowners are about to get hit with insurance rate increases unlike any other we’ve ever experienced. We’re talking as much as 30% to 40% over what you are paying now and price hikes of $1,000 or more for your next year of coverage.

Insurers have been warning for years that these increases would hit us hard. And now they’re here, thanks to years of rising claims abuses, court-clogging litigation, spiraling costs from hurricanes Irma and Michael, and one of the most active seasons in memory for severe and destructive weather.

When Weston resident Ruth Bettini opened her insurance renewal notice in September, “I almost died of shock,” she said. The annual premium to insure her $550,000 house with Orlando-based St. Johns Insurance Co. had increased by 28% — from $4,647 last year to $5,946 for the term beginning Oct. 1. That’s $108.25 more per month.

She asked her agent to shop for a lower price. “But everything else that was available cost even more than that, so I went ahead and renewed it.” Bettini says her house is not what any insurer should consider a bad risk. Hurricane-rated accordion shutters cover all of her windows. All of her doors, including her garage door, are impact resistant. And she had her roof replaced a year ago to meet current windstorm codes.

“I’ve done all the upgrades I can do to make it hurricane-proof,” she said.

As a real estate agent, Bettini says she worries about effects of the rising prices on her livelihood. “I’m really getting concerned when I see these insurance rates because I think they’re pricing people out of the market.” Warnings about rising insurance rates might sound familiar. Prices in South Florida have been rising for the last five years, after a brief era of stability resulting from a 10-year hurricane drought between 2006 and 2016. Afterward, insurers blamed rate hikes on home repair scams and sharp increases in opportunistic lawsuits by a small number of aggressive law firms.

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Those problems haven’t gone away. But they’ve been compounded by other factors, such as higher-than-estimated losses from hurricanes Irma in 2017 and Michael in 2018 and a steady march of costly events over the past couple of years in northern and central Florida, including tornadoes, hail, floods, and storms spun off near-miss hurricanes and tropical storms.

Mounting losses compelled the global financial companies that sell reinsurance — which is insurance that insurance companies buy to guarantee they can cover losses after catastrophes — to raise their rates 20% to 30% before this year’s hurricane season. Your insurance company, of course, plans to pass that increase to you. Some analysts see reinsurance rates climbing again in 2021, based on the record of 10 named storms making landfall in the United States this year.

How to Spot an AOB Homeowners Insurance Scammer?

For Florida homeowners, a flood in the family room or other home insurance claims might just be the start of their troubles. Some contractors may take advantage of what’s called an assignment of benefits (AOB) agreement and leave homeowners in the lurch.

A recently passed a bill in Florida that is aimed to curb the abuse of assignment of benefits. It’s important to recognize the potential problems of signing over your claim benefits to another party.

Homeowners who are dealing with major damage may assign their benefits to the business making the repairs because it has more experience working with an insurance company to settle a claim. A reputable restoration company may help the homeowner navigate the claims process. But a scammer may take advantage of the situation. An assignment of benefits is an agreement that transfers your insurance claims rights to another party. When you sign an AOB form, you give someone else the authority to:

File an insurance claim.
Make decisions about repairs.
Collect insurance payments.

A disreputable business can easily abuse an assignment of benefits. Once you sign this agreement, you give up your rights as the policyholder

Dishonest contractors take advantage of this situation by padding the bill and hiring an attorney to sue the insurance company when it denies the claim. Some found the system so lucrative that they paid plumbers plenty for every homeowner who signs an AOB. Lawsuits filed by contractors who have been assigned benefits by their clients were on the rise.

Florida’s new legislature caps attorney fees on AOB lawsuits, which should help deter these opportunistic practices.

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