Thousands of homeowners in Northwest Florida have been forced to buy a new homeowner policy. Gulfstream Insurance, a Florida-based insurer, has refused to pay homeowners’ unpaid claims and has warned them to cancel their policies in 30 days. Effective July 1, the state is all set to place the new limits on what insurers will pay for damages.
Moreover, policyholders who own state-owned insurance will have to pay a higher premium. Gulfstream has approximately 32,000 policies in Florida. That is to say, over 32,000 residents have to buy a new property insurance policy in 30 days. The changes primarily come from a new bill to control the costs and bring more insurers to Florida.
A major problem Florida homeowners face is the damage and destruction during hurricane season. Now, it’s getting more costly to insure properties against major catastrophic damages.
On the flip side, there is the cost of operating a business where insurers have to spend a large sum of money to defend claims, investigate potentially fraudulent claims, or defend against illegitimate or frivolous claims.
And as they need to spend that extra amount on these activities, they have to recoup the spending from somewhere. It also adds to the cost of the coverage these companies offer to the homeowners.
If you live in Florida, you may have seen a potential increase in the number of insurance companies offering homeowners coverage in the state. The legislation of these insurers has made the environment a little uncertain or vague with regard to insurance costs. Whether it is reducing the amount of fraud or decreasing the incentive for lawyers to file suits, expenses are rising.
Maybe insurers who decided not to run operations in Florida will come back. The vibrant private market for insurance has raised authorities’ hopes. Many insurers comfortably estimate the cost of operating a business in Florida through the private market.
Currently, with fewer insurers in the state, premiums will increase faster compared to their current rate. The current rates are increasing by 10 percent per year. The new homeowners insurance policy allows companies to increase rates by 11 percent and then by 12 percent the following year.
So, with a potential private insurance market in Florida, homeowners may see a decrease in their premium rates with more options and competition among insurance companies.
All in all, as insurance companies like Gulfstream can’t handle claims due to harsh weather events and litigations with lawsuits, Floridians need to look at private insurers to reinsure their homes with an outstanding claim. Thus, seeking legal advice from an insurance attorney is essential to make the right decision in light of recent changes in homeowners insurance policies.