With South Florida home insurance costs spiking, now's time to review your policy

Article Courtesy of The Orlando Sentinel

By Ron Hurtibise

Published July 26, 2016


Many if not most South Florida homeowners will get a surprise in their mailboxes before the end of the year: Home insurance premiums are increasing.

Your first instinct might be to look for ways to cut your bill to make up the difference. Insurance experts say you might be able to find hidden savings by taking a close look, along with your agent, at what you are covering, how much coverage you have, the amount of your deductible and whether you are getting all of the discounts you have coming.

But be careful, they say, that you don't put yourself at risk of facing a deductible you can't afford to pay, or getting too little money to rebuild your home if a catastrophe hits.

Make no mistake: If your premiums haven't already increased, they probably will.

Already this year, 16 home insurance companies have secured approval for widespread rate increases. Higher rates are in effect at eight companies, and increases by seven others will kick in by Sept. 1.

Florida homeowner insurance rate increases by company as of July 22, 2016
Nine more companies have submitted requests for state approval of rake hikes that would take effect by the end of November.

We asked Florida insurance experts to help identify ways homeowners can save money at renewal time or at least make sure you are getting maximum coverage for your premium dollar.

They identified several factors to consider:

Read your policy and know what it covers. "It's amazing how many people spend very little time knowing what they've purchased to protect their most important asset," says Jay Neal, president and CEO of the Fort Lauderdale-based Florida Association for Insurance reform.

The most important thing policyholders can do is review their insurance applications and declarations pages, says Nancy Dominguez, executive director of the Florida Association of Public Insurance Adjusters. Is all of the information correct? Does it list all upgrades and storm-hardening improvements such as storm shutters, impact windows or hurricane straps on roofs?

Get a home mitigation inspection. For $100 to $150, a mitigation inspector will come to your home, check out any feature that can qualify you for a discount, then give you a report that you can submit to the insurance company.

"You may be eligible for discounts with construction features that already exist," says Lynne McChristian, Florida representative for the Insurance Information Institute, an industry supported organization. "Plus you will get ideas on home improvements that can earn additional discounts and more importantly make your home more resilient and better protect your family."

Dominguez said she failed to get an inspection "and overpaid on my premiums for about five years. I thought my agent got it right. It turns out, they didn't." The mitigation inspection saved her $800 a year, she says.

Before you renew, sit down with your agent and review your existing policy and your options. "See if anything needs to be changed," says David Thompson, education instructor for the Florida Association of Insurance Agents. "For example, the policy could have been endorsed [additional premium] for a home-based business that has since been closed."

Your agent can tell you which insurance companies are willing to cover your home. Not all are, especially if you live in Miami-Dade, where costly water damage claims and lawsuits have prompted some insurers to blacklist certain ZIP codes. An agent can also tell you how insurance companies differ not only in what they cost and what they are willing to cover, but how they respond when you make a claim.

Some insurance companies allow you to choose your own repair contractor, while others have managed repair programs and expect you to use the contractor they choose. Companies with managed repair programs tend to be less expensive but might not be as thorough in how they make repairs, Neal says.

If you do business with a "captive agent" an agent who only sells one company's products consider talking with an independent agent able to sell products from many companies, he says.

Make the easy improvements. Do you have storm shutters for all of your coverings except a side door? Say goodbye to a big potential discount. "Adding shutters or impact glass is a huge discount," says Dean Fulton, a Fort Lauderdale-based insurance agent, "but every opening must be protected. That includes skylights, glass block, doors and garage door. If you had 30 openings and protected 39, the discount is still zero. You must protect all 40."

The same is true for roof-truss tie downs," Fulton says. "If you have 60 trusses and the inspector sees one that isn't nailed correctly, you lose the discount."

Claim your discounts. Discounts are available for having a centrally monitored security system that might come close to offsetting the monthly monitoring cost, McChristian says.

Have you upgraded your plumbing? Your air conditioning and heating system? Your electrical wiring? Did you install a new garage door? Claim your discount.

Some companies give discounts for replacement of wood siding with siding made of durable fiber cement, says Robert Norberg of Arden Insurance in Lake Worth.

Check into bundling. Just like the telecommunications companies hawking discounts when you combine phone, internet and TV service, some companies offer price breaks by combining home, auto or other insurance products.

Only purchase the amount of insurance you need. This will differ depending on how much money you are willing to spend out of pocket if a catastrophe happens.

You have to decide on two different deductibles: A hurricane deductible that typically ranges from 1 percent to 5 percent of the property's insured value, and the multiperil (non-hurricane) deductible that's typically a dollar amount, like $500 or $1,000.

Many people think the hurricane deductible is a percentage of the claim, but it's not, Neal says. So if you have a $300,000 home and a 5 percent deductible, you'll have to spend $15,000 out of pocket before coverage kicks in. You'll save money on your premium with the higher deductible, but make sure you can afford the out-of-pocket expense if you have a catastrophic storm claim.

You'll have to make a similar choice when deciding how to insure your contents. Insuring the actual cash value of your contents will cost less than if you insure for replacement value, but you'll be reimbursed after damage or theft based on the depreciated value of the items. In most cases, that won't buy you a new sofa or TV. Insuring for replacement value will.

In Florida, you have the option to drop contents coverage, which means you are insuring only the structure itself, McChristian says. "Taking this option might not be worth it in the event of significant damage, so price it out before deciding," she says.

Neal advises that if you opt to save money with a higher deductible, roll the savings into a flood insurance policy if you currently are not required by your lender to carry one. Homeowners policies don't cover flooding, but nearly half of property owners in areas vulnerable to storm surge that's much of coastal Florida don't bother to carry flood insurance.