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How to Find Affordable Florida Home Insurance in a Dysfunctional Market
How to Find Affordable Florida Home Insurance in a Dysfunctional Market The Florida home insurance crisis is something that just won't seem to go away.
Even though the state has been largely hurricane free the past three years, new clouds are forming on the horizon as many Florida insurance companies may look to raise rates. And if they don't get the rates that they want, you should expect them to start dropping and cancelling policies again.
State Farm Florida is leading the way on this. After the State of Florida recently turned down the company's request for 47% rate increase, the company is appealing that decision in court. You should expect other companies to follow State Farm's lead.
Prior to Hurricane Andrew in 1992 it was easy to find homeowners insurance in Florida. It was simply a matter of picking up the phone book and calling your nearest agent. There were hundreds of companies who wanted your business.
That kind of Florida home insurance market is long gone - replaced today by a dysfunctional market where less than 40 companies are actively writing any new business at any time in the state. And unlike the old days where companies had large surpluses and deep multinational parents to help absorb hurricane claims, most of the home insurance companies still active in the market are very small, Florida based companies.
Many of these Florida based companies just opened their doors for business during the past three years. As a result, there is a lot of concern about many of these companies being undercapitalized and lacking in post hurricane claim processing experience - a potentially lethal combination that could lead to long delays in getting claims paid after a Florida hurricane.
In this brave new world of smaller, newer, lightly funded Florida home insurance companies, shopping for insurance the old way just won't work anymore. As a consumer, you have to change your strategy and tactics to be successful in finding affordable Florida home insurance in today's market.
Here's how you can be a smart consumer and find affordable Florida home insurance:
Don't use a captive insurance agent that only represents a limited number of companies. Instead use an independent agent that represents multiple companies that will allow the agent to present you with many options.
Don't work with only one independent agent. Work with several. Why? Because a single agent doesn't represent all of the companies still writing new business in today's Florida insurance market.
Find out the names of the Florida home insurance companies that use a general agent or write policies directly without using an independent agent network. This is important because some companies have tried to reduce the cost of insurance by cutting back on or eliminating insurance agent commissions. If you go this route, make sure you understand each and every line item of coverage on your present policy because you won't get the personalized service and recommendations that an independent agent can provide you with. You'll have more choices this way, but you will be on your own.
Find out the financial ratings of each of the companies you are considering. Don't pick these companies solely based on the lowest price. You need to know how much surplus each company has on hand to pay claims when they happen.
Ask your agent about the company's risk diversification. How many policies does the company have in Florida? Where are their policies located? How are they spread out across Florida? Are they reasonably distributed across the state or are they concentrated in the hurricane alley of South Florida?
Find out how long the company has been in business and whether they have any experience processing Florida hurricane claims. You don't want your claim to be "on the job training" for a brand new company. Check with your agent to find out the history of complaints filed against the company.
In this market, your goal is to create as much competition for your policy as possible. After you've received quotes from multiple agents and companies its time to narrow the field. Don't make your decision on price alone. Make sure the coverage from multiple companies is identical. After you've looked at the coverage, narrow the field further based on the financials and customer service history of each company.
Give serious consideration to paying more for a policy from a company that has more surplus, stronger financials, has been in business longer, and has fewer complaints in its history.
Last but not least - don't go into Florida's state run insurance company of last resort - Citizens Property Insurance Corporation unless you've exhausted all of your private company options.
If you follow these steps you'll create the most competition possible for your Florida home insurance business and you'll be doing all that you can to get the most for your insurance dollar.
About the Author:
Michael Letcher is a former Fortune 500 executive and is a licensed CPA. His on line database can help you get affordable Florida home insurance quotes. Find out the secrets of the Florida home insurance market in his free newsletter by visiting => www.homeinsurancebuyers.org
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