My New Blog

Old homes get chance at insurance coverage

TALLAHASSEE, Fla. – March 21, 2007 – Old homes get chance at coverage: New legislation says insurance firms can’t deny policies based solely on home’s age. 

Been kicked around by insurance companies because you happen to live in a home that was built in the Cold War era?  Well, relief may be on the way depending on how well your home is fortified to withstand wind damage.  Some private companies in the state already are beginning to insure older homes as a result of legislation that grew out of January’s special session on property insurance.

“It said a company cannot refuse to issue a policy strictly based on the age of a home,” said Sam Miller, executive vice president of trade organization the Florida Insurance Council, Inc. “So the companies who had a philosophy based just on the age of a home can’t do that anymore.”

Bob Lotane, spokesman for the Florida Office of Insurance Regulation, said it’s too soon to know how many companies are writing policies on older homes, but there have been some.

“We do know that companies like Edison Insurance – which is a small company but they’re growing – they are willing to write on older homes,” he said. “I think the larger concern with that change in the law was not only so companies would potentially write older homes but to prevent them from wholesale nonrenewing them.”

In fact, doing so based solely on the age of a home can get a company investigated, Lotane said.

“If we’re hearing complaints of this we can order a market-conduct investigation,” Lotane said. “That’s probably going to be problematic. That’s something we want to hear about.”

Homeowners can report such activity to the Florida Department of Financial Services’ hot line at (800) 342-2762, Lotane said.

Prior to the law change, many companies were dropping or refusing to write new coverage on homes that were, on average, more than 10 years old. Companies still have leeway to turn down older homes if they don’t meet certain standards like roof age and condition of wiring and plumbing, Lotane said.

Other factors may also contribute to insurers opening up to older homes.  Because state-run Citizens Property Insurance Corp., Florida’s insurer of last resort, was ordered by the Legislature to maintain competitive rates – though not rates that are actuarially sound – some private insurers are seeing an exodus of customers to Citizens in search of lower rates.

State Farm Florida recently saw its first loss of policyholders ever, said company spokesman Chris Neal.

“Between Jan. 1 and now, we lost several thousand homeowners policies. That’s never happened to us before,” Neal said. “Now, granted, we have a million policies, so several thousand is not a lot. But we’ve never had a net loss of homeowners policies before.

“Looking at this new legislation, we expect to lose a lot of business to Citizens because their rates aren’t based on any actuarial basis or business basis. They’re set on a political basis.”

As a result, State Farm Florida plans to begin offering new homeowners policies on older homes that are 10 miles from the coast and have roofs less than 10 years old.  That would also apply to wood-frame homes as long as they are up to code, Neal said.

“We’re basing it on how the home is built and if it complies with the current statewide building code,” Neal said. “It could be built at any time, but it has to comply with that code.”

Recent startup Northern Capital Insurance is taking on homes up to 54 years old, said local insurance agent John Laurie, a principal at BB&T-Wyman, Green & Blalock, in Bradenton, who serves on Northern Capital’s board.  That’s largely due to changes Florida made to its Hurricane Catastrophe Fund that allows insurers to buy reinsurance – essentially, insurance for insurance companies – at a lower rate.

“They’ve (homes) still got to be concrete block and we’ve got to have an inspection to make sure it’s been upgraded, but that’s a huge cry from no coverage,” Laurie said. “That is due to the reinsurance that we can purchase from the state and there are other companies that are doing that. I think that’s a function of the new law.”
 

Copyright © 2007 The Bradenton Herald, Fla., Brian Neill. Distributed by McClatchy-Tribune Business News.