Posted by rick m on May 02, 2006 at 22:53:35:
I agree completely
Insurance Grief - Posted by Ellen
Posted by Ellen on April 30, 2006 at 15:22:43:
I haven’t read any recent postings regarding increases in insurance premiums for "06. I just received my annual bill from Nationwide. I have 12 rentals in Cleveland, OH. They increased the premium across the board 30%! My first thought when I opened the envelope was there has to be a mistake. My second thought was I’m being singled out because it’s Cleveland.
30% seems excessive. Has anyone experienced anything close? I’ve already increased the deductible to $2500 per location. It’s sickening to feel like your’e being gouged. At last check, no one else was writing policies for rentals in Cleveland. Before I vent with the agent, I’d love to know where I stand. Any thoughts would be appreciated.
Re: Insurance Grief - Posted by John Corey
Posted by John Corey on May 01, 2006 at 13:07:39:
Ellen,
Assuming no claims or other specific reasons for your risk profile to change I have heard that rates are generally up given the large claims some firms have paid out. The WSJ had an article that property outside the hurricane zones have experienced rises to cover the losses in the hurricane zone.
As you already indicated, it is time to check around and see what someone else can do. Also see if there is a way to change your coverage to find a lower rate but still providing the coverage you want. With 12 units maybe there are some other options.
You could also check with the OH state office that regulates insurance companies to see if they have any surveys of what is going on in OH and in Cleveland. If you rise is in line with the averages then you may have to think more about a rent increase vs. a way to lower the bill. If raising the rents is not an option then consider why you are holding. Maybe you can switch to a different deal structure (lease/option, CFD, etc).
John Corey
Insurance Grief in Florida? - Posted by Robert Campbell
Posted by Robert Campbell on April 30, 2006 at 21:17:21:
Because of the risk of hurricane damage, I’ve read where a lot of property insurers are pulling out of the Florida market.
Because of that, I’ve read where insurance premiums have doubled or tripled.
True or false?
Robert Campbell
Re: Insurance Grief in Florida? - Posted by Rich[FL]
Posted by Rich[FL] on May 01, 2006 at 11:52:10:
I think I may have mentioned this before, but over the last three years, my personal home insurance rate (2200 sf house on 1 acre of land out in “the sticks”) went from $650/yr to about $2400 per year.
I haven’t seen any corresponding increase in my rental property (yet), but I’m sure it’s coming. I can’t get a reasonable rate for my latest MH acquisition. I bought it for $10k and can’t get insurance for less than about $650; so, I’m self-insuring but still looking when I get a chance.
Rich
True…somewhat. - Posted by Scott (FL)
Posted by Scott (FL) on May 01, 2006 at 10:58:41:
I have my rental dwelling policies with State Farm… Prior to them, there were 2 companies that I had that pulled out, sorry can’t remember their names.
My premium has not doubled but raised about 20% along with an extra $25-40 that is titled “Citizens”. From what I was told, that extra line is to compensate for the hurricanes.
Scott
Re: Insurance Grief in Florida? - Posted by Wayne-NC
Posted by Wayne-NC on April 30, 2006 at 22:31:05:
We are pretty much left with a state plan underwritten by Citizens. Coastal NC is pretty high too for many of the same reasons. I get hit hard in both states. The price is high for both a good living and living good.
Re: True…somewhat. - Posted by rick m
Posted by rick m on May 01, 2006 at 21:55:53:
That is the additional payment (TAX) into the FL state sponsored Citizens insurance (insurance of last resort) for those on the coast lines that can’t get insurance from anyone else. They had proposed another increase in the payment (TAX) but it was shot down and now they are contributing from the general funds.
There is certain to be additional taxes though, especially if we get hit again this year. If you read the local coverage it looks like All-State has pulled out and is leading a charge in Tallahassee to provide coverage up to a certain amount and have the state cover any losses above and beyond that amount. Kind of like the FDIC insurance from the banks.
I personally believe this is a power play by the big insurance companies to limit their liabilies and have the state be responsible for some of the payments. They know the state’s revenues are way up due to property increases and population growth and they are trying to get their paws on some of the funds.
Re: True…somewhat. - Posted by Bob Smith
Posted by Bob Smith on May 01, 2006 at 23:40:57:
Part of the problem is that FL state regulators won’t permit private insurers to raise rates by enough to cover costs. It’s a big political issue for the Florida Insurance Commissioner, which is an elected office, and certainly not the first time an elected official has tried to use the power of his office to get reelected.
Asking the state fund to act as reinsurer is a rational response to what the regulators are doing; if you can’t raise rates, ask your liability to be limited. If you can’t do either, leave the state.
i agree but - Posted by rick m
Posted by rick m on May 01, 2006 at 23:47:10:
“if you can’t raise rates, ask your liability to be limited. If you can’t do either, leave the state.”
I guess you are right to a degree, and had they done it in that order I would completely agree but, I don’t know that they are not simply trying to have the best of all worlds.
Hence;
- Leave the state to establish a power position
- Get rates raised
- Limit liability
It it looks like a duck and quacks like a duck, probably a duck. Not saying they are not entitled to do this, but they certainly weren’t lowering policies for the last 25 years when they weren’t having to pay out.
Re: i agree but - Posted by Bob Smith
Posted by Bob Smith on May 02, 2006 at 16:59:44:
Yes, but what usually happens is that during periods of inactivity competition overcomes insurance markets and insurers keep rates low in order to capture market share, often below what they really need for sufficient reserves. Then they get whacked with a big event and have to raise rates a bunch to where they should have been if they had been raising them bit-by-bit over time. The fact that Florida’s insurance commissioner is elected, and therefore has a political incentive to both keep rates too low during reserve building periods and refuse necessary compensatory increases when the inevitable happens, just exacerbates the problem.
If rates were unregulated (like they should be) we wouldn’t have the problem of only 1 or 2 private insurers for the entire state of Florida, who can use a threat to leave as leverage with the insurance commissioner. There would be many competitors who would gladly take their customers, rendering their threat void.