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Daily Real Estate News | September 7, 2004
Fla.: Owners Wake Up to New Insurance Reality
Florida residents will once again begin the post-hurricane cleanup process, but many are discovering that insurance companies and state officials have changed the rules, making it easier for carriers to refuse payment.
In an attempt to prevent insurers from leaving the state, the state legislature bargained to shift more of the cost burden to consumers. Premiums rose to four times their pre-1992 totals and many policies now include hefty deductibles, which homeowners will have to pay before insurers begin paying claims.
Insurance Information Institute Chief Economist Robert Hartwig notes that the legal changes in Florida have allowed the insurance market to continue working despite the continued devastation in recent months. In fact, a third storm is set to hit Florida by the end of the week, even before the damages from Hurricanes Charley and Frances are rectified.
Critics of the legal changes are concerned that the concessions to keep insurers in the state were too generous, leaving many homeowners without the funds to rebuild. For instance, adjusters could consider damages in one area of the house as a continuation of a claim, while a tree falling on another part of the house could be considered a separate new claim with its own deductible. Moreover, homeowners will end up paying deductibles twice for damages caused by two different storms.
Source: Wall Street Journal (09/07/04); Oster, Christopher; Mollenkamp, Carrick; Terhune, Chad
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