Why are homeowners insurance rates increasing?
With everything else going on this year, policyholders across the country are getting notifications from their service providers and wondering, “why are homeowners insurance prices up?” We know this can be confusing and frustrating, so let’s get through it together. There are several drivers behind the rate increase, such as claims, lawsuits, natural disasters, and significantly increased reinsurance costs.
What do Complaints, Lawsuits, and Natural Disasters have in common?
The leading causes of the current rate increase are a large number of lawsuits and home insurance claims filed, whether they are valid or not. For example, in 2019, Florida did not have a major hurricane. Yet hundreds of lawsuits continue to be filed each week because of Hurricane Irma three years ago. In addition, the number of lawsuits against Florida’s insurance companies, in general, is increasing.
This year, about 150,000 lawsuits were filed against insurance companies in Florida compared with 92,000 in 2019 and 45,000 in 2018. That’s a huge leap. Last year, 60 Florida property and casualty insurers reported $700 million in losses. This year, we’re on track to hit $1 billion (Jack Lowenstein). All these lawsuits and losses mean increased coverage for everyone. Some things we cannot control, unexpected things happen and natural disasters are… natural.
However, there has been a tendency to scam claims and lawsuits; This is something we can all try to prevent together. Roofers are notorious for moving neighborhoods, luring gullible consumers with the promise of a new roof and no deductible; “Just sign here!” They are trying to convince you to sign an AOB, a written legal contract between you and another party in which you transfer specific rights granted to you under your policy to the contractor.
Although many reputable organizations use AOB, these forms are widely abused and widely written, in some cases. ALL YOUR RIGHTS under the insurance contract. AOB is also often used by unscrupulous providers to inflate claims damages and costs. Always be suspicious of anyone who offers to present a complaint to your service provider on your behalf.
What is reinsurance? Why does it affect my insurance rate?
So what is reinsurance? Reinsurance is insurance that an insurance company buys from another insurer to protect itself against the risk of a major claim event. This insurance must be purchased annually and helps to withstand the risk of a catastrophic event, such as a hurricane.
This year, the average reinsurance rate increased by 20%-50%; This affects insurance providers nationwide. Even Bankers, with our 44-year history of timely claims processing, were not immune to significant industry-wide reinsurance rates and unusual weather losses from Hurricane Season last year. 2020. As a result, insurance providers are forced to include these price adjustments in their products. While these price adjustments occur as many are looking to cut costs and expenses, market forces require insurance providers to make these adjustments quickly.
When should I file a home insurance claim?
The big question is, “When should I file a home insurance claim?“ Insurance is purchased to help balance out major expenses should something unexpected happen. If something unexpected happens, you should ask yourself if the event is a standard home maintenance expense or a major event. Do you have a leak in your plumbing? Or broken pipes causing thousands of dollars in damage? If you’re not sure whether you should file a complaint, you can always contact your agent with any questions. Your agent is an important resource you can trust.
We hope to be able to explain the current situation in the insurance industry. With the new year coming and many of us working from home this past year, it may be a good idea to reevaluate your current insurance policy.
