Florida insurance info

[fastpat]

I don't live in Florida, but found this interesting nevertheless.

January 22, 2007
Riverboat Gambling and Insurance
Posted by Lew Rockwell at January 22, 2007 08:35 AM

Harry E. Teasley, Jr., chairman emeritus of the Reason Foundation, writes to Florida newspapers:

"Dear Editor, Well, our newly elected politicians and governor are really riverboat gamblers in populist drag. From experience we know that Citizens and several private insurance companies, spawned by Citizens, under-priced hurricane risks prior to 2004. We know this is true because of the insolvencies and/or bankruptcies of some of the private companies and the fact that the state had to resort to taxing all policyholders of property insurance with a surcharge following the 2004 and 2005 hurricanes seasons

"Following Hurricane Andrew, the legislature should never have created the JUA or Citizens and now it is planning to go into the reinsurance business as a way to continue the populist idea of under-pricing risk in Florida. But as most adults know, there are no free lunches; someone has to pay. Sometimes gamblers are lucky; some times they are not. The state government was lucky for the decade from 1994 through 2003; however, after just one bad hurricane year Citizens blew through its accumulated reserves and after two years Citizen-spawned private companies blew through their capital, accumulated reserves as well as their reinsurance programs.

"Since Hurricane Andrew, some homeowners have acted responsibly and hardened their homes; others have not. Some wish to live in high-risk locations; others are more cautious. Some homeowners have obtained property insurance in the private market; some have not.

"The populists and the politicians that pander to them, condemn the 'big bad' profit-seeking insurance companies, but the empirical facts run counter to that view. Prior to 2006 the insurance companies experienced huge losses in the Florida property and casualty markets. They too had been under-pricing risk, partly as a result of government intervention into the market by controlling entry, exit, policy terms and prices.

"So, now that crack team in Tallahassee is going to play poker with your and my money. In short the legislature is collectivizing risks and setting the stage to socialize costs. I, frankly, don’t care what the legislators do with their own money or their time, but I don’t cotton to being coerced into taking risks that are not of my own making or paying a surcharge on my privately-obtained property policy.

"The state cannot make insurance more affordable or available except through solutions that are draconian, misallocate resources and will, in the long term, fail. We don't need more government intrusion and intervention; we need much less.

"In praise of individual liberty, personal responsibility, free-markets and adulthood, Respectfully submitted."

Reason Magazine is well worth a subscription.

[targa911S]

This one of the big reasons I left FL. I talked to my old neighbors the other day and they now have to pay $4,500.00 a year for home owners insurance. If I were still there I would not have been able to retire.

[legion]

If your house is in an area that gets wiped out once every 30 years, you should be paying about 1/30th the value of your house a year in insurance.

[fastpat]

According to the article, that's the problem. The government insurance system is underpricing premiums relative to the risk.

[targa911S]

Originally posted by legion
If your house is in an area that gets wiped out once every 30 years, you should be paying about 1/30th the value of your house a year in insurance.

So on a $400,000.00 house you should pay $13,000.00 in premiums annually? Did I really do that math right?

[fastpat]

Originally posted by targa911S
So on a $400,000.00 house you should pay $13,000.00 in premiums annually? Did I really do that math right?

Well, there's more to it than the simple math. Actuarial data figures into the equation. That is how high is the risk for significant storms, where are the homes located, proximity to water, build strength and quality, and so forth.

[Jims5543]

My house was built in 1987. For 20 years insurance companies have collected premiums on this house in the $1000 a year neighborhood, $20,000.

Do you think I claimed $20,000 in damages in the 3 hurricanes that hit my home? I did not, I claimed about $4,500 and that was underestimated so I got screwed.

So with my house the insurance company was head of the game by over $15,000. So what did they do? They raised my insurance premium from $1400 a year to $4,000 a year. Thats $333 a month added to my mortgage and god forbid your escrow came up short that will easily add another $200 a month.

I now have my insurance deductible set at $10,000 and I insured, not for the value of the home, but for the mortgage amount so I can walk away out of debt if my home is destroyed.

Yet we are not allowed casino's in Florida.

[trap]

I don't even begin to understand insurance. I realize the devastation has been huge but I've lived in the Tampa Bay area for more than 10 years and do not know anyone who has made a significant claim due to weather. I have a stilt house on a fairly shallow canal off Tampa Bay - but it's also 20 miles inland from the Gulf. I wanted private insurance - very badly. But none was available. Nothing. By the time we got to closing, we needed something so it had to be Citizens. My premiums are not low.

But then again Florida is basically a third-world country with stuff. But then again again - I've been driving with the targa top off the 911 this month.

[trap]

Thinking about that 1/30 value per year idea makes me think I should move. I think I'll move to California. Oops, nope, earthquakes. OK, I'll go to Alaska. Nope, damn, earthquakes there, too. I know, I'll move to Washington. *****, volcanoes and earthquakes. OK, I'll head for the Chesapeake. Big damn - they've had more hurricanes than Tampa. Inland, I'll go inland - how about Memphis? Whoa, big earthquake - and scientists say another could come any day now. Illinois is where I'd rather be. ***** again - they could get the big ass earthquake, too - assuming a tornado or a flooded river doesn't get me first. Nope on Iowa, Oklahoma, Kansas and Texas, too - killer death ice storms and, yep, tornadoes.

It appears that everyone in the country should move to Minot, North Dakota. Other than "winter kill" what could happen there? My homeowners should drop to nothing. Perhaps that would be fair.

[Moneyguy1]

Insurance is a collective. YOu may not ever make a claim but someone will certainly make up for your good fortune. In AZ, a few years ago, State Farm raised their homeowners rates by a considerable amount. When questioned, they said it was because they had lost a class action suit concerning mold damage. They had no reserves put aside "just in case" and had to raise rates in order to cover their court mandated losses. They also eliminated mold coverage as well. Hartford did not, the rates at Hartford did not increase and many people transferred coverage.

(The local State Farm rep said: "Well, you can reduce your premiums if you increase your deductible." To which I responded: "I can reduce my grocery bill if I eat less as well.")

Case closed.

[nota]

insurance is a scam and placeing a bet that you will lose
I donot like those odds esp when then the insurance CORP
can change the rules at will

read about the post katrina claims not paid
many CORPs said dammage from wind forced water was not covered by windstorm insurance, but flood dammage and flood insurance was needed [but they never offered flood insurance before the storm!!!]

if you have flood insurance then they said dammage is by wind not water or want your money [cake and eat it to] but not to pay out any

fools who live directly on the coast should pay for the risk
and expect a total loss in a direct hit but demand feds cover their costs plus a subsidy on their cost from more inland people

roof tect is a very bad joke requiring nails and single ply roofs that will blow off
and building codes donot allow a screwed and glued multi layer roof to be used like the bahamas use without tile or shingles
that just turn in to flying missiles in a big storm
beams and truss codes are also a bad joke too
useing far to small spec's and multi bit construction to save the builders a few bucks but if a bit fails the whole roof goes followed by the house
and even if the roof mostly stays in place in lesser storms the water dammage is very bad

none of that happens with a boat type screwed and glued multi ply roof with desent sized beams like the bahamas use
but sure it costs a little more at first but pay now or pay later
but no we cannot do that because of building codes

[legion]

No insurance company offers flood insurance. It is a federal program offered only by the federal government.

[nota]

Originally posted by legion
No insurance company offers flood insurance. It is a federal program offered only by the federal government.

not quite
from allstate's web site

''*Excess Flood Insurance coverage is currently available only in the following states: Alabama, Arizona, California, Colorado, Delaware, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Maryland, Michigan, Mississippi, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia, Washington. In order to qualify for an Excess Flood Insurance Policy, you first need to purchase a National Flood Insurance Policy through Allstate. Excess Flood Insurance is provided by one or more insurance carriers not owned by or affiliated with Allstate Insurance Company. Excess Flood Insurance is subject to availability and qualifications. Other terms, conditions and exclusions may apply. Contact your local Allstate agent to find out whether Flood Insurance coverages are available in your state.''

[legion]

Okay, but you need to purchase flood insurance to buy the excess coverage, and the excess coverage is not from Allstate but from a third party. Excess coverage (over $250,000) is VERY expensive. (Actually, it costs what it should, it's just expensive compared to the grossly oversubsidized federal flood insurance.)