You’ve paid your homeowner’s insurance for years and taken nothing in return.
Unlike your neighbor down the street, you didn’t let a shady roofing company file a claim for damage from a long ago storm and get you a free roof. That’s not the klnd of person you are.
But recently you might have opened your mailbox and found a letter stating that your insurer has decided not to renew your policy, like thousands of other homeowners recently. Now what are you going to do?
Finding another company isn’t as easy as it used to be, as all but a handful of insurers, repelled by high rates of fraud and litigation, refuse to write new business in Palm Beach, Broward and Miami-Dade counties. The remaining few will cover only new homes or existing homes with new roofs, agents say.
You have options, but you probably won’t like them. One is to sign on with state-owned Citizens Property Insurance Corp., the so-called “insurer of last resort,” which will leave you vulnerable to a surcharge of 45% of your annual premium if the company runs out of money paying claims after a catastrophic hurricane season.
Another option is to buy a policy that will pay you only the depreciated value of your roof if it must be replaced, leaving you on the hook for the difference — thousands of dollars. Florida insurance experts say that might soon become the only way to keep your home covered.
Getting non-renewed has become a challenge for tens of thousands of Florida homeowners over the past few years as insurers look for ways to get risky properties off their books.
And if you live in an older home, with an older roof, in a hurricane-prone city or ZIP code where too many people are filing claims — fraudulent or legitimate — then your home could become a target for non-renewal.
If it happens, don’t panic. Florida law requires insurers to send notices of non-renewal at least 120 days before your term expires so you’ll have time to find other coverage.
Don’t assume that your insurer suddenly suspects you of being a fraudster if they no longer want your business. Often, they are forced to reduce concentrations of risk by terms dictated by their reinsurers — the companies they buy insurance from to guarantee they’ll have enough capital to pay off claims after a catastrophe.
A reinsurer might decide the insurer has too many homes close to the ocean, too many with roofs over 10 years old, too many homes over 30 years old, too many with deteriorating building materials, or too many homes in regions with claims that turned into expensive lawsuits.
Two South Florida companies recently targeted some of their policyholders for non-renewal. Fort Lauderdale-based Universal Property & Casualty, which no longer writes policies in its home region, is declining not to renew 2,500 of its policies. With more than 700,000 policies in Florida, spokesman Travis Miller pointed out that the number of non-renewals “pales in comparison to both the total number of policies written by the company and the amount of new business it has historically written.”
Coral Gables-based Weston Insurance Co., which specializes in windstorm coverage, is non-renewing about 500 of its wind-only policies, according to a local agent with access to proprietary information from insurers. Weston’s CEO and president did not respond to an email seeking confirmation.
It’s not clear how many policies are being non-renewed statewide, but the troubling trend is reflected in the rapid increase of customers fleeing to state-owned Citizens over the past year. Since April 2020, the company’s policy count has increased from 445,000 to 563,000 and is now growing by 4,000 policies a week. Citizens officials expect to have more than 700,000 by the end of the year, prompting a push by legislators and Citizens’ new chairman to make the company less attractive by raising premiums and cutting agents’ commissions.
Proposals to cut costs for insurers — and encourage them to offer insurance to more homeowners — are currently being debated by the state Legislature. One of the most controversial proposals would allow companies to drop full replacement coverage for roofs, long required in “all perils” homeowner policies, and instead offer only partial reimbursement for any damage that doesn’t result in total loss of the structure, such as a major fire or hurricane.
Prospects for the change dimmed recently when it was removed from the House version of two companion bills winding their way through the Legislature.
More and more insurers, however, have decided not to wait for the Legislature to act.
Rather than denying coverage for homes with older roofs, some companies are offering to cover the depreciated value of roofs as part of policies that would otherwise be unchanged.
A handful have secured authorization from the Florida Office of Insurance Regulation to offer depreciated roof coverage for homes they wouldn’t otherwise insure, said Dulce Suarez-Resnick, vice president of NCF Insurance Associates in Miami. Unlike the automatic change that would be permitted under the proposed legislation, the reduced coverage would be purchased as an optional “Actual Cost Value” endorsement chosen by the policyholder.
Meanwhile, other companies are beginning to offer depreciated roof value coverage as part of a bundled type of policy usually sold to owners of rental properties. These policies, called Dwelling Fire policies, are meant to insure structures against fire, wind and hail damage, while leaving tenants to buy their own insurance to cover their own contents.
Locke Burt, president and CEO of Ormond Beach-based Security First Insurance, said his company has about 25,000 of these policies, purchased partly by homeowners enticed by a 5% premium discount, but also by those who cannot otherwise qualify for traditional policies with full roof replacement coverage.
“The increase in price and lack of availability [of traditional policies] is going to create situations where for many consumers, their only choice is Dwelling Fire with Actual Cash Value on the roof,” Burt said.
Agents caution that Dwelling Fire policies can vary significantly from insurer to insurer. Some insurers, for example, won’t sell them for owner-occupied homes, while others have no problem with it.
When comparing options, homeowners must pay special attention to what companies’ Dwelling Fire policies cover and don’t cover. In most cases, consumers can get the same coverage as traditional homeowner policies but they’ll have to pay separately for features, like liability and personal property coverage, that come standard in traditional policies.
“What I would say is it’s a la carte,” Burt said. “You buy only what you need.”
Ryan Papy, president of Palmetto Bay-based Keyes Insurance, an affiliate of Tom Gallagher Insurance, expects more companies to promote options that include depreciated value roof coverage. “We can expect the most reputable, recognizable and sizable carriers to begin this practice in earnest,” Papy said by email. “I believe it is a good faith effort to protect against the rising rates and frivolous lawsuits.”
Suarez-Resnick said that while depreciated roof value coverage is better than no insurance for non-renewed customers, she worries that too many will face a financial crisis if they ever need an emergency roof replacement.
“Customers won’t understand that with every passing year, their insurer will pay less and less,” she said. “It’s going to put people in a bad situation, but what are you going to do?”