Homeowner’s Insurance Too Expensive? Florida Insurance Information

I found a great article in the tbt* newspaper that raises the issue of  high cost homeowner’s insurance here in Florida.  When I speak with clients who purchased a home just a year or two ago, I tell them to check their insurance rates and coverage.  A lot of homeowners were stuck having to be insured by Citizens Insurance, which is through the State, and much more expensive than other companies. Bottom Line….call your insurance agent.  Cheaper homes, cheaper insurance ?

Property  values have dropped by a third since the pricing peak in summer 2006. So why haven’t homeowners insurance premiums free-fallen by a corresponding amount?   They have.   But you’re going to have to give up delusions of grandeur about your home’s real value. The fact is, many of us are now overinsured.   The insurance increases we got socked with in 2006 had manifold causes: hurricane damage, future storm risk, giant insurers leaving the market, home price escalation, frivolous sinkhole lawsuits.   While we’ve still got a hurricane bull’s-eye on our backsides, there’s plenty of give on home prices.   For starters, a home’s value includes the price of the lot. Lot values range from a few thousand dollars in the exurbs to million-dollar waterfront spreads. If your house burns to the ground or collapses in a cyclone, the land probably isn’t going anywhere. So why are you in­suring    If your home is flattened, rebuilding costs are lower. Labor accounts for most of the drop, but costs for things like steel should continue sliding this year.   If the thought of reducing insur­ance coverage leaves you feeling vulnerable, you can do what I did: Split the difference. My home’s value has dropped by $100,000 the past three years, but I compro­mised and trimmed coverage by $50,000. I’m still shielded from catastrophe but saved $500 a year in premiums.   Insurance agents may disagree with that strategy. Better to insure yourself to the hilt, they’ll say. Values will rise again and you’ ll be underinsured.   But ask yourself one thing: If the real estate industry is deflating, why should property insurance soar like a big fat hot air balloon? The pin’s in your hand. Pop it.

James  THORNER tbt* COLUMNIST

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