With all of the chaos in the Florida home insurance market, what is the best way for you to find the best Florida home insurance companies?
For starters, it’s never been more important to have coverage with a private company – avoiding the bureaucracy of Citizens Property Insurance Corporation. While Florida’s state run insurance company of last resort, is charging below market rates and competing with the private market, there are plenty of storm clouds on the horizon.
Citizens has stated that it does not charge enough in its rates to cover the risks that it is taking. As a result the company has to borrow even before hurricanes happen to keep enough cash on hand to pay claims. It has enough cash to pay for smaller hurricanes but a major event would send Citizens into the bond markets looking to borrow to pay your claim. If you are a policyholder of Citizens, you’ll be facing higher special assessments than those who have home insurance coverage in the private market after a major storm. Last but not least, Citizens has not distinguished itself with fast and fair claim payments after major hurricanes.
Moving to the private market of Florida home insurance companies, you should look for companies that have most or all of the following:
Longevity – companies that have been around longer simply have more experience and better developed systems to write policies and process claims.
Financial Stability – high ratings from the financial rating services, a sizeable surplus from which to pay claims, and backup reinsurance coverage from highly rated companies.
Risk Diversification – a core base of policies that include an appropriate mix of newer, inland homes balanced out against older homes that are closer to the Florida coast. The company’s policy base should be geographically distributed across most of the counties in the state of Florida – not just concentrated in the South Florida coastal counties. Finally it is better to find a company that has expanded its policy base to other states in addition to Florida.
Customer Service – the company must have an outstanding customer service reputation and a record of fast and fair claims processing. In other words when you call them someone quickly answers the phone. If you have a billing question, they have the right people and systems to help you. Following a hurricane, it means that an adjuster will come to visit your home quickly and to assess the damages. And when he leaves, the company quickly values your damages and sends you a check.
Here’s how you can assess whether the Florida home insurance company you are evaluating can satisfy your expectations in these areas:
Check the websites maintained by the Florida Office of Insurance Regulation and find out when the company first started doing business in Florida. Try to find a company that started doing business before the 2004 hurricanes.
Find out the company’s NAIC (National Association of Insurance Commissioners) code and use it to investigate the company’s financial ratings with AM Best and Demotech. Find out how much surplus the company has to pay your claim. Don’t bother trying to assess the quality of the company’s reinsurance – the Best and Demotech ratings take that into consideration.
Ask your Florida home insurance agent to explain to you how diversified the company’s policy base is across Florida and in other states as well. Find out what you can about the type of risks the company is writing. In general, Florida home insurance companies that have assumed policies from Citizens have a higher risk profile that must be balanced off against newer homes that are further from the Florida coast. Finally, ask your agent about the company’s complaint history for the past couple of years. Rule out any company that has had a higher number of complaints filed against them relative to the amount of insurance premium they have written.
Even if you only do have of the due diligence suggested above, you’ll be far ahead of the typical Florida home insurance consumer in finding a great home insurance company for your needs.
Michael Letcher is a Fortune 500 executive and a CPA. His on-line guide can help you find, screen, and contact Orlando homeowners insurance companies. Find out the secrets to affordable Orlando home insurance in his free newsletter at => http://www.homeinsurancebuyers.org