The past few years has seen the real estate market collapse. Home values have declined by greater than 50% in many markets throughout Florida, and especially here in South Florida.
Yet despite those declining values, many home owners have seen their home insurance rates rise in recent years. Despite the decrease in home values, many insurance companies are requiring homeowners to carry greater values in home insurance than the home is actually worth in today’s market.
For instance, a home may be worth say $200,000 in today’s market. But many insurance companies, including Citizens, may require that homeowner to purchase insurance regarding the replacement value of that home that is far greater than the home is worth. Such values may even be as high as $300,000 despite the fact that the home is only worth say $200,000 in today’s market.
It seems that the insurance companies are greatly exaggerating the cost to replace a home following a disaster. Especially in light of our declining real market.
The only conclusion that can be reached is that insurance companies are using the increased replacement costs values as a back door method to secure greater rate increases above and beyond the rate increases that were already approved just a few months ago. The below news report video discusses that in greater detail.
Not surprisingly, the insurance companies see nothing wrong with requiring home owners to purchase the replacement value coverage for their homes at values that are in some instances twice as much as what the home is actually worth. They deem such rate increases as “necessary and proper.”
Of course, the fact that Florida has not been hit by a hurricane in a record 6 straight years did not lessen the need for insurance companies to further raise insurance rates. Their reserves are teetering on dangerously low levels that could spill heartache and frustration for many homeowners should Florida experience another hurricane season like the ones in 2004 and 2005.
If you are in doubt regarding your legal rights under the insurance policy, or you are in need of assistance with your insurance claim, please feel free to call us today to discuss your claim.