Why Florida Insurance Is Getting So Expensive
Part of owning a home is having insurance. Insurance can protect your bank account and property from a number of things, like natural disasters. However, this year it has been noted that the cost of insurance has gone up rapidly. There are a few reasons why this may be happening.
Roofing Fraud
Roofing fraud and the rising replacement costs of homes are a couple of the reasons why Florida insurance rates are going up so much. Sometimes, when a roofing company approaches you about fixing your roof, they may ask you to sign an assignment of benefits letter.
This letter allows the roofing company to take over the claim from you. A lot of times in this situation, the roofing company will inflate the cost of repair and take the insurance company to court. Usually, the insurance company loses such cases and you are the one who suffers the biggest loss.
Your insurance company will then pass on their legal fees as well as the cost to repair the roof to you through rising premiums. The Insurance Information Institute reported that insurance companies in Florida lost $1.6 billion in underwriting in 2021.
Supply Chain Disruptions
There is a shortage of building materials, including lumber, due to supply chain disruptions. The shortage of skilled labor and inflation have also played a role in the increase in insurance premiums. As a result, more money is necessary for insurance companies to pay to rebuild homes once a claim has been filed.
The value of the home may be different from the replacement cost, the cost to rebuild a home before it was destroyed. Although replacement cost does not factor in the land’s value or the building codes of today, the rebuild may be more expensive due to new building codes, inflation, and lack of supply.
Quite a few insurance companies offer replacement cost coverage. They try to factor in inflation. However, due to the abnormal rates that exist in today’s climate, it can be hard to keep up when calculating insurance rates.
At the start of the pandemic, lumber producers decided to cut back on the production of lumber due to fears of another recession. As a result, demand for lumber increased causing the price to spike by 400%.
President Biden also decided to increase the Canadian lumber tariff to 18%, which was just 9% in the previous administration. This also affected prices as Canada supplies 30% of the United States’ lumber.
The Increased Demand for Roof Replacements
Insurance companies are becoming less inflexible when it comes to roof quality. As a result, south Florida roofing companies are seeing an increase in the number of homeowners inquiring about a new roof. This is because their insurance company is threatening to drop them if they do not replace their roofs.
There is logic behind this, considering that some roofs start to deteriorate between the 10- and 15-year mark. Also, when you take into account the hurricanes that hit south Florida, it makes sense that an insurance company would not want to cover a house with a 15-year-old roof.
There are some homeowners whose roofs can last another 25 years, though. However, they may still need to replace their roof due to the demands of their insurance company. Some insurance companies are giving notices to their clients that if they do not replace the roof within 30 days, their policies will not be renewed.
Insurance for Condo Owners
These increased insurance rates have also affected condo insurance, also known as HO-6. You are not required by the state of Florida, to have HO-6 insurance. However, your condo association may require you to have it. This may be because the insurance of the condo association will not cover damage to your property or the structural elements of your condo.
Some mortgage lenders may even require you to have it. Florida has the most expensive HO-6 insurance of all states due to the number of hurricanes that ravage the area annually.
FLA Condo Insurance
If you are looking for a company that can help you find affordable HO-6 insurance, even in today’s climate, contact FLA Condo Insurance. We have years of experience in helping individuals like you get sufficient insurance for your property.
