Are increasing insurance rates making home ownership unaffordable?
Are increasing insurance rates making home ownership unfordable? The rise in homeowner’s insurance premium is making home ownership more costly. Citizens Insurance the state’s largest insurer can be expected to ask for yet another rate hike.
Homeowners are really starting to feel the pinch across the state. Citizens currently has over 1.3 million policies written with 45% of those policies located in Miami-Dade, Broward and Palm Beach counties. Owners in these higher risk areas of South Florida find themselves having to turn to Citizens as this is the only option they have in many cases. Several private insurance companies will not write wind policies in these counties east of I-95 (obviously a heavily concentrated area).
Citizens had an increases of 10% granted in September 2010 which took effect on most policies in January and February 2011; and policy holders can expect an additional increase to be passed this year of up to 11.2%. Although the maximum hike is currently capped at 10% annually, there is legislation which may go to the floor as early as this week which would increase the cap to 15%.
However, policy holders must also realize that citizens had a rate freeze for three years (2007, 2008 and 2009). Therefore prior to 2010 the last increase was in 2006.
If you are in the market to purchase a home be sure to check the insurance rates you will be paying during your due diligence period. Your realtor should be able to refer an insurance agent.
If you are a current home owner and you are experiencing rate hikes contact your insurance agent prior to the renewal of your policy and explore options to reduce your rate. Some policies may allow you to reduce the amount of insurance for personal property or perhaps they allow you to insure the depreciated value versus the replacement cost of your personal property. In addition, a homeowner could consider raising their deductible to offset costs. Although no one wants a higher deductible when a storm hits or other mishap occurs measuring out your options is always helpful.