Legislature drops ball, so people drop coverage
Palm Beach Post Editorial
When Floridians asked for help this year with homeowners insurance, the Legislature decided to go bare. So, it's no surprise that Floridians are doing the same thing.
As The Post reported Sunday, some homeowners have calculated that they are better off without wind insurance and are dropping coverage before their insurer drops them or because they refuse to pay post-Charley-Frances-Ivan-Jeanne-Dennis-Katrina-Rita-Wilma rates. Others are trying to guess how long it might take to build up a repair fund with money that didn't go for premiums over several years.
For many Floridians, it's a pointless calculation. They have mortgages, and most lenders won't allow homeowners to drop coverage. In any case, it's a risky calculation. What happens if you guess right for three years but are wrong on the fourth? How many people have the $30,000 to $40,000 it could take just to replace a roof, fix the interior and replace contents? If the home were destroyed, could you borrow enough against the land to rebuild? If you had to live somewhere else during the repair work, where would that be? Could you afford to do so?
This paper cannot recommend what individual homeowners should do. But it's easy to understand why Floridians, especially South Floridians, are doing the math. In this part of the state, the private wind insurance market is broken, even if Gov. Bush and the legislative leadership won't acknowledge it. Last week, Nationwide became the latest company to deliver a double whammy. The carrier wants a statewide rate increase of 71 percent - nearly 100 percent in Palm Beach County - and will drop a "significant" number of its quarter-million policies in the state. Most, if not all, of those who lose coverage will go into state-run, last-resort Citizens, whose rates are required to be the highest in Florida.
The problem, though, goes even deeper than people paying much more and getting less coverage. Complaints about slow payments or non-payments by insurers are growing. Insurers are demanding that homeowners rebuild where they were living. Some victims of Hurricane Andrew took their claim and moved without rebuilding. And State Farm tried to justify its nearly 80 percent rate increase request by blaming the cost of reinsurance that it buys from ... State Farm.
Florida already subsidizes the wind insurance market through the hurricane catastrophe fund, and the subsidies will have to increase. Democrats want a state-run pool to cover the first $100,000 in damages. One idea might be "roof-only" insurance. Whatever the solution(s), Tallahassee needs to act. Three years ago, after doctors complained about having to "go bare" on malpractice insurance, the Legislature held three special sessions. But doctors blamed the trial lawyers, whom Republicans were happy to confront. This time, the problem is the insurance industry, and the Legislature won't bare its teeth.
When Floridians asked for help this year with homeowners insurance, the Legislature decided to go bare. So, it's no surprise that Floridians are doing the same thing.
As The Post reported Sunday, some homeowners have calculated that they are better off without wind insurance and are dropping coverage before their insurer drops them or because they refuse to pay post-Charley-Frances-Ivan-Jeanne-Dennis-Katrina-Rita-Wilma rates. Others are trying to guess how long it might take to build up a repair fund with money that didn't go for premiums over several years.
For many Floridians, it's a pointless calculation. They have mortgages, and most lenders won't allow homeowners to drop coverage. In any case, it's a risky calculation. What happens if you guess right for three years but are wrong on the fourth? How many people have the $30,000 to $40,000 it could take just to replace a roof, fix the interior and replace contents? If the home were destroyed, could you borrow enough against the land to rebuild? If you had to live somewhere else during the repair work, where would that be? Could you afford to do so?
This paper cannot recommend what individual homeowners should do. But it's easy to understand why Floridians, especially South Floridians, are doing the math. In this part of the state, the private wind insurance market is broken, even if Gov. Bush and the legislative leadership won't acknowledge it. Last week, Nationwide became the latest company to deliver a double whammy. The carrier wants a statewide rate increase of 71 percent - nearly 100 percent in Palm Beach County - and will drop a "significant" number of its quarter-million policies in the state. Most, if not all, of those who lose coverage will go into state-run, last-resort Citizens, whose rates are required to be the highest in Florida.
The problem, though, goes even deeper than people paying much more and getting less coverage. Complaints about slow payments or non-payments by insurers are growing. Insurers are demanding that homeowners rebuild where they were living. Some victims of Hurricane Andrew took their claim and moved without rebuilding. And State Farm tried to justify its nearly 80 percent rate increase request by blaming the cost of reinsurance that it buys from ... State Farm.
Florida already subsidizes the wind insurance market through the hurricane catastrophe fund, and the subsidies will have to increase. Democrats want a state-run pool to cover the first $100,000 in damages. One idea might be "roof-only" insurance. Whatever the solution(s), Tallahassee needs to act. Three years ago, after doctors complained about having to "go bare" on malpractice insurance, the Legislature held three special sessions. But doctors blamed the trial lawyers, whom Republicans were happy to confront. This time, the problem is the insurance industry, and the Legislature won't bare its teeth.
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