Friday, March 8, 2019

Why Did My Home Insurance Cost Increase?

Two Problems Hiking Your Home Insurance, and One Legislature with the Ability to Stop It

Ryan Papy, President of Keyes Insurance
The purchase price of a home is not the only cost associated with being a homeowner. You are also on the hook for property taxes, closing costs, and (importantly in Florida) home insurance. 

If you have bought a home or renewed your insurance policy recently, you likely saw the cost increase over previous policies. There's a reason behind that. 

Our guest writer this week is Keyes Insurance's President Ryan Papy, who explains why the current Florida Legislative Session might be ready to finally fix the problems that caused your increase. 

The Florida State Legislature is now in session. As an industry, we are waiting to see if they decide to look at two main policy items that currently affect our state’s homeowners and their property insurance costs.

The first, which has been the main driver of increased insurance costs, is the assignment of benefits issue regarding property damage and repairs. Assignment of benefits is the policy holder’s ability to pass their insurance benefits off to a contractor who, in turn, makes the necessary repairs to a damaged home before suing the insurance company for a much larger sum. That action hurts the profitability of the insurance company, which passes on those costs to the community as a whole by driving up rates.

The second issue is Florida’s one-way attorney fee policy. According to Florida Statute, this “loser-pays” system works in only one direction. If an insurance company fights a claim from an insured, whether for alleged fraud or other reason, and loses, they are obligated to pay the attorney fees for both parties involved in the case. Precedent has been set where settlement of a claim also constitutes a verdict in favor of the insured, meaning that the insurance company is forced to pay any attorney fees. The statute is meant to discourage insurance companies from contesting valid claims but has also given rise to potential fraudulent claims. In turn, insurance companies in Florida have raised rates to balance this uneven distribution of rights.

Both of these policies affect insurance rates. We have seen recently that, in order to help get mortgage approval for new business transactions, we have had to look for ways to cut insurance coverage. The industry is at a point where we can’t cut more cost from policies without leaving homeowners vulnerable. We hope the legislature will pick up these two policy issues and help stabilize the rates offered to policy holders. Stay tuned!

Have questions about your coverage? Want to shop around and see if you can get a better rate? Email us for a FREE quote at: 

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