Changes May Be Coming for Home Insurance as Companies Look for Ways to Limit Risk

Changes May Be Coming for Home Insurance as Companies Look for Ways to Limit Risk

According to a recent report, Florida insurance companies have been ordering more home inspections to get homeowners to make necessary repairs or find reasons to get rid of high-risk properties. Some homeowners have learned of these changes after switching companies or upon receiving correspondence from their current insurer demanding that actions be taken within a certain number of days. These developments seem to indicate that changes may be coming for home insurance as companies look for ways to limit risk.

Changes to the Florida Home Insurance Market

In recent years, the Florida home insurance industry has been inundated with claims from homeowners impacted by hurricane activity. In 2017, claims from damage following Hurricane Irma had risen to $17.4 billion after having been initially estimated to only reach $9 billion. In 2018, Hurricane Michael resulted in $7.4 billion in claims. In addition, insurance companies have had other weather-related claims since the storms. There has also been a reported statewide increase in lawsuits against insurers. These changes have led to the rise in the rates for reinsurance or insurance the companies have to buy to ensure they will be able to pay for claims after a catastrophic event.

Limiting Risk

With these added expenses, several companies are looking for ways to limit risk exposure. Consequently, some have refused to renew or write policies in areas with increased claims or lawsuits. Other companies are restricting coverage based on the property’s condition. For example, some insurers will not sell policies when a home has problems with plumbing, or there has been past water damage. A homeowner may find that a company is willing to insure their property but that it will require several home inspections. If an inspection report reveals a risk, the homeowner could be ordered to remedy the policy’s problem or risk cancellation or non-renewal. In some instances, a company may have gone years without requesting an inspection, and now they are coming up more often.

New Policies and Florida Law

Florida law provides insurance companies 90 days after a policy is issued to verify that a homeowner’s application information is correct and examine the property’s risks. The insurer can cancel the policy during that time for any reason. After 90 days, the insurer only can cancel if:

  • The insured misrepresented information on the application
  • The insured didn’t follow the instructions the insurer provided within the first 90 days, or
  • There is a substantial change to the risk.

If none of these conditions are met, the insurer can wait and not renew the policy. The third category, “there is a substantial change to the risk,” is where many homeowners are seeing changes to their existing policies. With a tighter insurance market, Florida homeowners may be seeing stricter and more burdensome requirements as they shop for insurance.

Contact a Florida Board-Certified Real Estate Attorney

At Rabideau Klein, David E. Klein, Esq. and Guy Rabideau, Esq. are dedicated, Palm Beach County Florida Bar Board-Certified Real Estate Attorneys with extensive experience assisting clients with multi-million-dollar property transactions. We have the expertise and knowledge you need to ensure that your property interests are protected.  Contact Rabideau Klein today to discuss your real estate legal needs.

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