Florida is facing a challenging situation in the home insurance market, as many major insurers are leaving the state or dropping customers due to the high risk of natural disasters and lawsuits. As a result, homeowners are forced to look for new options, some of which are unfamiliar or untested. In this article, we will explore how Florida homeowners are navigating the new insurance landscape and what they need to know before switching providers.
The rise of new insurance companies in Florida
One of the consequences of the exodus of major insurers from Florida is the emergence of new insurance companies that are willing to take over the policies of displaced customers. According to the Florida Office of Insurance Regulation, six new companies have been approved to assume up to 153,000 policies from Citizens Property Insurance, the state-run insurer of last resort, starting from Dec. 15. These companies are:
- Edison Insurance
- TypTap Insurance
- Florida Peninsula
- SafePoint Insurance
- Slide Insurance
- American Traditions
Some of these companies are relatively new, such as Slide Insurance, which was founded in 2020 and has an A rating from Demotech, a financial analysis firm that evaluates the solvency of insurance companies in Florida. Slide Insurance is also assuming policies from Farmers Insurance, another major insurer that is leaving the state.
The challenges and risks of switching providers
While the arrival of new insurance companies may seem like a relief for homeowners who are losing their coverage, there are also some challenges and risks involved in switching providers. One of the main challenges is to compare the offers and premiums of different companies and decide whether to accept or reject them. According to the law, policyholders only have the option to reject switching if the offers are more than 20% higher than their current Citizens premiums. However, some insurance agents say that rejections are running about 50%, as some homeowners are wary of switching to unknown or unproven companies.
Another challenge is to understand the coverage and exclusions of the new policies and make sure they meet the needs and expectations of the homeowners. Some new insurance companies may have different terms and conditions than the previous ones, such as higher deductibles, lower limits, or more restrictions on claims. For example, some new policies may not cover water damage caused by plumbing leaks or roof leaks, which are common sources of claims in Florida.
A third challenge is to verify the financial stability and reputation of the new insurance companies and make sure they can pay their claims in case of a major disaster. While the Florida Office of Insurance Regulation is responsible for ensuring that the companies are financially sound and have adequate reserves, some experts warn that some new companies may not have enough experience or capital to withstand a catastrophic event such as a hurricane or a wildfire. Moreover, some new companies may not have a good track record of customer service or claim handling, which could lead to frustration or litigation for homeowners.
The tips and advice for homeowners
Given the challenges and risks of switching providers, what can homeowners do to protect themselves and make informed decisions? Here are some tips and advice from experts and regulators:
- Check the financial stability rating of the new insurance company from Demotech or another rating agency. A rating of A or higher indicates that the company has sufficient financial strength and claims-paying ability.
- Review the policy documents carefully and compare them with your current policy. Look for any changes in coverage, exclusions, deductibles, limits, or endorsements. If you have any questions or concerns, contact your insurance agent or the new company for clarification.
- Research the customer service and claim handling history of the new insurance company. You can check online reviews, complaints, or lawsuits filed against the company on websites such as Better Business Bureau or Consumer Affairs. You can also ask your friends, family, or neighbors who have experience with the company for their feedback.
- Know your rights and options as a policyholder. You have the right to reject an offer from a new insurance company if it is more than 20% higher than your current Citizens premium. You also have the right to shop around for other insurance companies that may offer better rates or coverage. However, you should be aware that finding another insurer may be difficult or expensive in the current market.
- Be prepared for possible rate increases or policy changes in the future. The home insurance market in Florida is volatile and unpredictable, as it is affected by many factors such as weather events, litigation trends, reinsurance costs, and regulatory actions. Therefore, you should expect that your premiums may go up or your coverage may change over time, regardless of which company you choose.