Mistakes You Don't Want To Make When Picking A Florida Homeowners Insurance Company
After Hurricane Andrew hit Florida in 1992, many of the best Florida home insurance companies began to leave the state. Many more exited Florida after the hurricanes of 2004 and 2005. Today the few name brand companies that remain for the most part don't write any new business. What was once a prominent list of over 500 companies is now a short list of about 40 brand new start up companies that most people have never heard of.
With all of the chaos in the Florida home insurance market, what is the best way for you to find the best Florida home insurance companies?
For starters, it's never been more important to have coverage with a private company - staying away from the bureaucracy of Citizens Property Insurance Company. While Florida's state run insurance company of last resort, is charging below market rates and competing with the private market, there are plenty of storm clouds on the horizon.
Citizens Insurance Florida has stated that its premiums are not high enough to cover the risks that it is taking. As a result the company has to borrow even before hurricanes happen to keep enough cash on hand to pay claims. It has enough cash to pay for smaller hurricanes but a major event would send Citizens into the bond markets looking to borrow to pay your claim. After major storms, if you are a Citizen policyholder you will be subject to special assessments that will be higher than those who have coverage in the private market. Last but not least, Citizens has not distinguished itself with fast and fair claim payments after major hurricanes.
When considering Florida's private home insurance market, companies that you are considering should have most or all of the following:
Longevity - companies that have been around longer simply have more experience and better developed systems to write policies and process claims.
Financial Stability - high ratings from the financial rating services, a sizeable surplus from which to pay claims, and backup reinsurance coverage from highly rated companies.
Risk Diversification - a core base of policies that include an appropriate mix of newer, inland homes balanced out against older homes that are closer to the Florida coast. The company's policy base should be geographically distributed across most of the counties in the state of Florida - not just concentrated in the South Florida coastal counties. Last but not least it is better to find a company that is writing home insurance business in other states in addition to Florida.
Customer Service - the company should have a reputation for excellent policyholder customer service along with a track record of fast and fair claims processing. That means when you call them someone answers the phone quickly. If you have a billing question, they have the right people and systems to help you. After a hurricane, it means that an adjuster will be scheduled quickly to come visit your home and assess the damages. And when he leaves, the company quickly values your damages and sends you a check.
Here's how you can assess whether the Florida home insurance company you are evaluating can satisfy your expectations in these areas:
Check the websites maintained by the Florida Office of Insurance Regulation and find out when the company first started doing business in Florida. Try to find a company that was formed before the hurricanes of 2004.
Find out the company's NAIC (National Association of Insurance Commissioners) code and use it to investigate the company's financial ratings with AM Best and Demotech. Find out how much surplus the company has to pay your claim. Don't bother trying to assess the quality of the company's reinsurance - the Best and Demotech ratings take that into consideration.
Ask your Florida insurance agent about each company's policy diversification across Florida and into other states as well. Find out what you can about the type of risks the company is writing. In general, Florida home insurance companies that have assumed policies from Citizens have a higher risk profile that must be balanced off against newer homes that are further from the Florida coast. Finally, ask your agent about complaints that have been filed against the company in the past few years. Eliminate any company with a large number of complaints relative to their share of the insurance premium written.
Even if you only do have of the due diligence suggested above, you'll be far ahead of the typical Florida home insurance consumer in finding a great home insurance company for your needs.
Michael Letcher is a former Fortune 500 executive with Bank of America and W.R. Grace and a licensed CPA. His on-line buyers guide can help you find, screen, and contact Florida homeowners insurance companies. Get his free newsletter at =>
www.homeinsurancebuyers.org
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