Floridians know their way around sinkholes, especially near Tampa Bay. It is likely, then, that the man who bought a house in the area was well-versed in the risks associated with living so close to Sinkhole Alley. He knew enough, at least, to call his insurance company for advice when he noticed cracks in his home’s foundation.
Insurance companies are all about risk. They weigh the odds that a home will be damaged by a flood or a windstorm, and they decide how much taking on that risk will cost. If the cost is too high, the insurer just says no to the applicant, either for the whole policy or just for the riskiest coverage. Think, for example, about the health insurer that denies coverage for a pre-existing condition but agrees to cover everything else. Or the homeowners insurance company that covers fire damage but not flood or windstorm damage.
Purchasing a home can be an exciting time in a person’s life. Owning your own property holds many responsibilities, and many homeowners take pride in their homes for good reason. Whether you bought a new construction home or a fixer-upper, there are many issues that can threaten the safety and value of your home.
We are talking about a small town — not in Florida — that recently received the bad news that its insurance company is canceling coverage for the police department and its vehicles. The town council has asked six insurance companies for quotes, but as of this writing, just two weeks away from the cancellation date, there has been no response.
An insurance company’s unusual move may have put it smack in the middle of a local political skirmish. This is not happening in Florida, but the situation brings up interesting questions about insurance coverage of public entities and policy cancellations in general.
A bipartisan group of lawmakers from both the House and the Senate announced last week that they have introduced a bill to provide relief to homeowners whose flood insurance rates skyrocketed on Oct. 1. The rate increases were part of the 2012 Biggert-Waters Flood Insurance Reform Act, so they were not unexpected. What surprised homeowners was just how steep those increases turned out to be.
Florida homeowners may get relief from flood insurance premium hikes after all. As we discussed a few weeks ago (start with our Sept. 24 post), the rate increases called for by the 2012 Biggert-Waters Flood Insurance Reform Act took homeowners and lawmakers by surprise. We all expected the increases to take effect Oct. 1, but, just as no one expects the Spanish Inquisition, no one expected rates to increase tenfold.
In the past few months, Florida and six other states have entered into settlement agreements with three life insurance companies regarding their failure to do due diligence in identifying deceased insureds and their beneficiaries. The states’ efforts began a couple of years ago and have already resulted in a number of insurers paying multi-million dollar settlements, revising internal processes or both. See our Oct. 12, 2012, post for information about the deal reached with Nationwide Financial Services Inc.
The Florida Office of Insurance Regulation is continuing to crack down on force-placed insurers. Earlier this month, the OIR entered a consent order against American Security Insurance Co. that will result in lower premiums for policyholders; the order should also result in less predatory practices by the insurer, the largest force-placed homeowners insurance company in the state.
A recent article about insurance claims reminded us of the movie “Roxanne.” Steve Martin plays the fire chief whose crew is in dire need of some training. One mishap after another leads to the scene in which an exasperated Martin exclaims, “You can’t have people with their houses burning down saying, ‘Whatever you do, don’t call the fire department!'”
