Florida home insurance cancellations are about to reappear this year. Just when you thought they were a thing of the past. Considering just two of the national carriers who have announced cancellations, Florida homeowners will receive at least 100,000 home insurance policy cancellations in their mailboxes this year.
The largest private home insurance company in Florida is going ahead with an approved program to cancel 125,000 home, condo, and mobile home policies. While this is good news compared to the estimated 700,000 policies it was originally planning on non-renewing, this is still a significant number of Florida homeowners who are going to be scrambling to find new coverage. The details of where those cancellations will come from is not known yet but it would be reasonable to expect that many of those cancelled will be located in Southern Florida Counties such as Dade, Broward, Palm Beach, Collier, and Lee.
Another major national insurance company announced plans late in 2009 to non-renew an additional 60,000 policies as it continues to shrink its presence in the Florida home insurance market. Perhaps these cancellations will be more easily absorbed because the company arranged for a regional Florida home insurance company to pick up those policies. However there is no guarantee that all of the policyholders who are cancelled will be able to find new coverage. It will be especially difficult for homeowners in Florida's southern coastal counties such as Dade, Broward, and Palm Beach to find alternative coverage. It will also be difficult for those with older Florida homes and those built with wood frame construction to find replacement coverage.
Last but not least, home grown Florida insurance companies continue to evaluate their existing risks and to selectively cancel policies. A portion of this is due to their reinsurance agreements which limit how much risk they can assume in certain zip codes. Sometimes they decide on their own to pare back their exposure in Southern Florida coastal counties. Finally, some of the newer Florida take out insurance companies eventually reject policies that they have previously taken out of the state run insurance company after discovering risks that they don't want to be exposed to. This might be a poorly built home or one that has not been kept in good condition. It's hard to estimate how many cancellations will come from regional Florida home insurance companies but 20,000 would not be unreasonable given the recent history. Again expect homes in South Florida to bear the brunt of these cancellations - especially homes near the Florida coast or built before 1995.
If those aren't enough reasons to be concerned about cancellations during the coming year there is one other development that could lead to more cancellations. Many Florida home insurance companies are moving forward with an aggressive plan to re-inspect homes that they presently cover. Some of those homes might not be in good condition and may not be hardened enough to adequately protect the home from hurricane damage. If your home is re-inspected by your present insurance company and they find a significant difference between the condition of your home and what their records show, you could join the ranks of those who have been cancelled in the coming year.
Finally, if your Florida home insurance policy is cancelled during the coming year, it is important to pay attention to the quality of the new companies you are considering. Three companies failed during the past year and had to be taken over by the State of Florida. In addition, over half of the remaining companies still open for business lost money in the last twelve months. If you lose your Florida home insurance policy this year, now is not the time to pick a new company solely on price. It is essential that you shop around. Select the wrong company and you could be waiting a long time to be paid after the next Florida hurricane.
As the year unfolds, pay close attention to the news and to your mail box. This could be the year that you have to come face to face with the reality of having your Florida home insurance cancelled. Even if you don't receive one of the 100,000 notices that will be mailed this year, chances are that you will know someone who is being cancelled.
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