I got renewal quotes on 2 of my investment properties in Tampa this week. Last year I paid $1475 in premiums for the 2 houses combined, but the quotes this year came in at about $2200. That's about a 40% YoY increase! In a non-hurricane year!
Do any other Florida investors have recent insurance hike horror stories? Any recommendations on other providers or is just universal across the board?
Yes. This is a big issue and legislators are looking at the causes. AOB (Assignment of Benefits) is a huge issue. I wrote a blog about it a few months ago. Shady contractors are getting the AOB and then suing the insurance companies for payouts (usually roofs but you are currently seeing the Morgan and Morgan commercials about the plumbing now) for things that probably shouldn't have been covered.
That drives costs up.
I just read an article that around 40% of your payment is to cover litigation costs. And when the cost to defend or pay out litigation goes up, so do the rates.
Take a look at why Doctors cost so much -- medical malpractice insurance is crazy -- Surgeons pay between $30,000 and $50,000 a year.
Insurance and Inventory. The two biggest things I am dealing with here in NWFL. On the insurance front, my personal home insurance went up $600. Basically, carriers are not wanting to insure shingle roofs at or over 15 years....they really want to see at least 3 years left (12 year roof or less). If the home was built before 2000...that is another strike. All..and I mean all....carriers are doing their own inspections after closing. Even if the home is not needing a 4pt. They are going and doing the inspection. Some example premiums (all owner occupied):
1950's home with all major components replaced in the last 5 years (HVAC, HWH, Roof, Plumbing, Electrical)....inland. $2500 a year. Only 1 carrier available as of the date of the quote.
1991 with all major components less than 7 years old $2200 a year.
2021 build around 1400 sqft...$670 a year.
The # of carriers that will insure mobiles up here is also dwindling. Quotes running around $2000 for a 2005 Doublewide. $150K coverage.
Advice to any homeowner or investor in FL: Don't even mess with a shingle roof. Pay more...get metal...be done. Those are the only systems that your insurance thinks can last more than 15 years. Also, don't get sucked into solar or storm shutters (speaking for NWFL)..those two items may not have the insurance benefits you think.
@Jason L. I am so sorry this is happening to you. It seems universal. I get quotes at least 3-4 times a week and all have been much higher than last year. I hope someone is able to comment with different advice.
I was recently told about a new roof replacement schedule endorsement being added to policies in Florida. Here's a link to one insurers explanation to it's agents.
Slide 1 (cgains.com)
Yes. This is a big issue and legislators are looking at the causes. AOB (Assignment of Benefits) is a huge issue. I wrote a blog about it a few months ago. Shady contractors are getting the AOB and then suing the insurance companies for payouts (usually roofs but you are currently seeing the Morgan and Morgan commercials about the plumbing now) for things that probably shouldn't have been covered.
That drives costs up.
I just read an article that around 40% of your payment is to cover litigation costs. And when the cost to defend or pay out litigation goes up, so do the rates.
Take a look at why Doctors cost so much -- medical malpractice insurance is crazy -- Surgeons pay between $30,000 and $50,000 a year.
Winter Park Florida SFH Having trouble getting any quote for insurance due to the normal underwriting concerns, roof, age etc, but what seems to be the roadblock right now is the partial repipe with Polybutylene. I'm a week away from closing on an all-cash offer (so is not the lender).
Recommendations? Is there such a thing as a rehab/construction period policy to get the piping changed over? Does anyone know of a company with will take on this risk albeit at a high premium until rectified?
Suggestions solicited and welcomed. Don
Hello Jason L. I just bought a 3/3, 1600 sq. foot Townhome with garage that was built in 2006 for $175,000 Cash. My Insurance Agent, whom I have been with for 30 years in Tampa, gave me a quote based on a property value of $248,000??? What is going on? She said that is what they would consider Replacement Value and it cannot be changed. This is a small, 17 Unit Townhome Community and some of them have roof problems. The shingle roofs are going to be replaced and I am going to wait until after that to look for another Insurance quote. I am with AAA Auto Insurance and will look into Bundling with them for another quote.
@Donald J Glidewell This may be a long shot but State Farm. I had a buyer client that purchased a 60's home recently. He already had a relationship with someone from State Farm.....but he was able to get 30 days to make the changes required without having the insurance premium increase. Basically like a grace period. I know that they have changed just like some of the other carriers but lately the coverage that they are willing to extend for the price is superior.
@Michael Haynes It sounds like this has more to do with the cost of replacement having increased exponentially. It also sounds like this community has an HOA...is that the case?
@Jason L.
Hey Jason, I have a guy who could possibly help you out with better pricing. I am a property manager here in Tampa and he has helped a few of our owners get better rates
Hello Mellisa Jolly, yes there is an HOA, but, this small community does not have a golf course and recreation room and club house and barbeque, just a small pool good for laps and the kids. So, HOA is $240/month includes Water etc. I looked for six months while I was selling my Commercial property in S. Tampa and this was the only Townhome I found with pavers in the driveway and patio. A nice touch that makes for less property taxes. The roofs do not need replacement if they would maintain what they have after 14 years, but, the Association does not want to do that. They have the funds and will replace all 17 units. So, maybe I can get a better Insurance quote for new roofs and if I sell after ten years there should be no Inspection problems. The "ten years of life left on a roof" for Mortgage approval is for real.
@Michael Haynes Sounds like you're getting quoted on replacement cost and not actual value. I bought a house in Indiana last year that was worth $100k, but every insurance quote I got was for between $130-150k because that was the least amount they would underwrite. So that's not just Florida unfortunately.
@Dan Maciejewski That's really interesting. I'd think something like that would've built up gradually over time, instead of the firestorm that came with all these recent hikes. Why do you think this would've been such a big issue in 2020-2021 all of the sudden? Is there any possibility this gets sorted out at some point or is this just going to be the new norm for insurance quotes?
@Jason L. Well, we know they aren't ever going to go down. Companies, especially insurance companies, will never take less profit!
I think the incredibly busy hurricane season this past year coupled with the increasing lawsuits are scaring the underwriters and/or the stockholders, so they react by raising rates. Florida has been the worst hit from insurance in the past years. And it looks like some companies are going as high as 33%!
S, basically, I would count on it as the cost of doing business here. At least there's no income tax!
@Jason L. Well, we know that the rates won't go down. Companies, especially insurance companies don't voluntarily take less profit.
I think the crazy hurricane season the past year, plus the rising lawsuits and awards, are making the underwriters and shareholders panic -- or at least nervous.
We have been the state hit the worst for insurance rate hikes over the past few years. And more is coming -- companies are getting another 33% rate hike coming up!
So, I do see this as being the new norm, unfortunately. From this linked article:
They took losses by keeping prices low for years to compete with the securities and are raising prices now to gain some of that back.
Insurers are also still paying for Hurricanes Michael and Irma. In Florida, policyholders have three years to file a claim related to a named storm. Many get filed just before the cutoff. While Hurricane Irma’s claim period is no longer open, insurers will need to continue accepting Hurricane Michael claims until late next year.
I guess we at least don't have state income tax!
Hello Jason and you all who are concerned about Home Insurance. I have been with my Agent for 30 years because I can talk with them normally. Years ago the Governor allowed Gallhager, the Insurance Commissioner to remove Florida from the National Pool of Insurance after one of the major hurricanes hit. That made us like Texas was this week with the Polar Vortex that froze the whole State and shut down all the Energy producers. On their own, because Texas thought they had enough sources to be their own Energy District. There are three Districts in the US. East and West and Texas! They screwed themselves by not being connected to the East/West Districts Grid and now you see the result in a calamity. Same with Florida. We are isolated from the National Pool and the newer Governors have tried to create a Private Pool of Home Insurance Companies to get us not to use the State Fund with Citizens. The problem is that none of these private Insurance companies has enough funds to cover a major hurricane, like Michael in 2018, that wiped out Mexico Beach in the Panhandle. In January there were 25,000 Claims for damages that had not been resolved as the Insurance companies delayed in Court any payments in hopes that the people with Claims would move away or die...which is happening. It's just like riding a motorcycle..."it's not IF you will have an accident, but, WHEN, if you live in Florida." We just had a Tornado do major damage in St. Pete this week with a little storm that went through. When I asked my Agent which Insurance companies in Florida can you trust she said, "none of them." You have to get Insurance if you have a Mortgage. I have a friend with 90 individual Trailer and Manufactured homes and he has self-insured for years on some of them. The rest of my life I will be traveling. I have properties in Brazil where we don't have organized Home Owner's Insurance. We build almost everything out of concrete and steel with ceramic bricks that don't burn. Even the ceilings are six inches of poured concrete and wire mesh. The only thing we worry about is a kitchen fire, which I have had in some of my rentals in Tampa. Since I will be gone most of the time, leaving a friend to live in my Townhome, I am concerned with fire and water leaks while I am gone. I am trying to get rid of almost everything I own in the US and just keep essentials like my documents and car and tools in the garage. Nothing fancy or really to be concerned about if there is a catastrophy, but, I will insure the property. I don't want to worry each year during the hurricane season, even though Tampa has not been directly hit by a hurricane since 1921. The insurance could cover some damages in whatever might occur. Here is a list of Insurance Companies in Florida. https://experiencedpublicadjus...
Like a thief in the night state farm is there
Hello John Thedford. That reminds me of a funny story...I was a Merchant Seaman on oil tankers with the M.M.& P. Union. On one trip I was on the Bridge with an old time Captain. He said that he was just in a fender bender when someone rear ended him. He was complaining that he had State Farm Insurance for 40 years and they cancelled him. It was not his fault and he was pissed.
I am letting everything lapse except the 2 policies where I have mortgages. The other 13--ADIOS. Here is how I look at it: lets say I lose a roof in 5 years. Well, I will have saved well over 50K. A roof might cost me 12-15K. I am ahead of the game. Also, if I DID have insurance and lost a roof, the insurance companies would hit me with a deductible. I have one friend that has been self insured for about 10 years. He is WAY AHEAD. So, I MUST carry 2 policies until these two are paid off. I do carry a separate policy for liability. What made me go this route? I had american "integrity" insurance. They denied a claim. I had a tenant deliberately damage a property and they claimed "abuse". When I told my agent I was dropping all of my policies, she exclaimed "you are taking it out on ME". So--her concern was not the fact that american "integrity" was screwing me, it was the fact that dropping the policies meant a DROP IN HER INCOME. To heck with HER! Now consider this: MOST insurance companies tend to DENY CLAIMS UP FRONT. If you fight, or hire a lawyer, you MIGHT get made whole. Isn't that dishonest? They PROMISE to cover for losses, and then play their games and VICTIMIZE THE POLICY HOLDERS. SCREW THEM! SCREW THE AGENTS! And in the event I take a loss, the ODDS ARE WAY IN MY FAVOR THAT I WILL SAVE MONEY OVER TIME.
@Michael Haynes state farm did my family VERY BAD a few years ago. They are in it to make as much money as possible while denying claims and leaving people up the river without a paddle. THIEVES!
Hello again John Thedford. That's what the Insurance companies are doing with the Mexico Beach claims. They deny and stall and take their time until you are forced to pay a Lawyer and try to get them to act. The Lawyer's bills mount up for people who don't have a place to stay or money to pay and the Claims don't get paid. That is the way the FBI has been going after people who have to hire Lawyers to defend themselves until they go Bankrupt and lose the case or make a Settlement. You are the victim and they use the Laws against you.
I didn't calculate exact numbers, but on top of my mind insurance premium across all my properties went up by 55%-60% in past 5 years.
The insurance system is the U.S is broken. I've discussed this with people from different countries. I don't know how many countries in the world have or don't have home insurance respectively, I know countries that do not have home insurance are just fine, government will pay for rebuild after nature disaster. It is totally a waste of labor resource to have so many insurance companies to insure something that has very small chance to happen. Banks in non-home-insurance countries issue mortgages because they are never aware of there is such a thing called home insurance. If a property is totaled, bank and home owner eat the loss. If a country really needs home insurance, insurance provider should be non-profit and should cover nature disaster only. When you see Lemonade went public and stock price skyrocketing, you know something is wrong.
I worked for a home insurance company for 4.5 years and heard that over 90% claims in Florida are water damage, and lots of unnecessary huge pay out (such as because one tile needs to be broken to stop water leak in slab, insurance needs to pay all tiles of whole house to avoid title mismatch. What a stupid law! A house is still livable even if a tile looks slightly different than others) and frauds (people left tub faucet water running and claimed that they forgot to shut it off before went out for shopping. People went to attic to burn one of roof tiles and claimed roof was hit by lighting. The tile looked black and smoked on the bottom but 100% fine on top, and insurance paid for the roof because it cost more to go to court).
It couldn't stop laughing me when I saw the company I worked for add new coverages - ID theft coverage, computer coverage, golf cart, etc for a few dollars more on each coverage. They spend unnecessary labor and time to make coverage more and more complicated just to make a few more dollars of profit.
Hello Weng L. and you all. This is just talking about the Home Owner's Insurance problem. The Flood Insurance situation is worse. Most of the population want to live on the Coasts and lots of them want to live close to Water. The Congress ruled that a temporary solution for Flood Insurance was to raise the price by 10% a year until a permanent solution to the huge shortfall could be found. That means that the owners of beach front homes will eventually not be able to afford Flood and the Banks are just waiting to Foreclose when the Mortgages don't get paid. But, they continue to build beach front housing and allow wood frame homes in California to be built in the forest. In Brazil our homes are built out of concrete and steel filled in with ceramic bricks and stuccoed. All fire proof materials. There is no Home Owner's Insurance. Your kitchen catches on fire? The rafters in your roof burn and you rebuild. Older structures built with lots of wood frame like the Museum in Rio that burned down with millions of unreplaceable fossils and art and historical objects are real catastrophy's. Those countries do not pay for fire suppression systems or sufficient fire alarms and security for old, public buildings and they burn down every day like Notra Dame Cathedral in France. I worked in the Oil Field for years and we went through three Hurricanes that hit the Gulf Coast of Mississippi. The first hurricane damages were somewhat paid for with Insurance. The second hurricane we found that most of the home owners did not have the money to buy Insurance and lost their homes. The third hurricane the majority of businesses and home owners were without insurance and they self-insured or moved away for good. The Casinos that were on floating barges, now, had the beach front land enough to buy and build again in Biloxi and Gulfport. Then, you find like in Port Charllote and Homestead Florida, where the hurricanes completely wiped out the communities, you have the vultures sweeping in to snatch up the lots to build on as if nothing happened. There is opportunity in Disaster Relief and Real Estate speculation with no concern for the eventuality of another storm. So, people like me who have paid off properties are considering to "self-insure" depending on how long their holding period might be. Pay Cash and take a chance? Maybe not with a wood frame structure and asphalt shingle roofs.
The state of Florida created Citizens Insurance to be an insurer of last resort, for homeowners who can't purchase insurance from a for profit insurer. If claims exceed claims reserves Citizens has the right to impose a surcharge on ALL policies issued in the state to cover the deficit. Most of Citizen insured homes are located in storm prone coastal areas and of course they are some of the most expensive properties in the state. by extension the homes are owned by some of the wealthiest people who generally are conservative Republicans and staunch opponents to all thing socialist. Except when it benefits them, then it's just good government.
Hello Peter Walther. The point is not so much that the Social Safety Nets are "Socialist" or worse yet, "Communist." The point is that these programs were supposed to be set up like Insurance programs for everyone. Insurance is supposed to be a pool of funds to benefit everyone who contributes to that fund. That does not mean that Illegal Immigrants are able to get Drivers Licenses to Vote and be included in our Medicare programs or collect Social Security payments etc. As long as the State does not become so big that the burearcrats think they are more important than the people, like Congresswoman Pelosi, then the systems may work for us all. The way Florida was separated from the National Pool of Home Owners Insurance means that Florida is essentially trying to "Self Insure" on it's own. That won't work in a hurricane, like the Mexico Beach situation. The private insurers do not have enough funds to cover the major catastrophies. Citizens has been trying to divest itself of all their policies and we who need good Property Insurance are just sitting ducks, waiting for the Big Bad Wolf to come and blow our houses down. I would rather live in Miami, but, it is safer in Tampa. We have not had a direct hit from a hurricane since 1921. If I were to move to Miami, I would get an above ground apartment on the second or third floor in case of flooding and if the lights go out and the elevator won't work... I would have nothing that I could not replace easily and documents need to be stored in water proof bags. A survival kit and stored food and water is a good idea. Insurance as much as possible. I only need a place to stay when I am in the States as I am single. If I had a family and lots of responsibilities I would be really worried about where I would make my Investments right now. Our Government is setting us up for a fall. The Flood Insurance program on the other hand is a Federal Program. Individuals who need Flood Insurance cannot pay in enough money to keep the program going. Just like our Social Security Insurance program. Congress has no solution as they cannot double what you pay each year for the next ten years or more to accumulate enough funds to actually cover damages each year. Congress decided to raise the cost of Flood each year, 10 percent, until they find a solution for that program. In essence they are raising the water temperature on the frogs in the frying pan until the frogs die. We sold our Hillsborough River property for a profit, ten years after the 2008 Economic Collapse and consider ourselves lucky. The only way the Federal Flood Insurance program will be able to pay for itself and benefit the most amount of people in need is to include a small Fee for Flood on every Mortgage issued in the Country each year. When you think of Flooding you do not consider the washouts that occur in the desert when there is a rain storm in the mountains and the bridges are washed away. You do not consider the houses that are built near the creeks who never imagined that the winter snow runoff could every turn that little creek into a raging river. and undermine the foundation of their homes. If Global Warming is really going to melt the ice packs and raise the ocean levels enough to flood out all the Coastal communities and raise the river levels, then, how is our Flood Insurance going to cover all that? And you never hear from all the people in a flash flood where their cars and trucks are flooded out. Cars don't have Flood Insurance and look at what was left of New Orleans after Katrina. Look at what's left of Puerto Rico where nobody has insurance and every year the storms come rolling through the Island.