Not all windstorm rates equal; Citizens Property Insurance not only game in town

Palm Beach Daily News--April 13, 2008

By GAIL LIBERMAN, Special to the Daily News

Windstorm insurance rates may be lower than you think, thanks to added insurance company competition in Florida.

So don’t assume that Citizens Property Insurance is the only game in town.

For lower windstorm rates than Citizens may quote, you’ll likely be required to also purchase standard homeowners insurance coverage. Last I checked, there were 26 companies approved to offer homeowners insurance in Palm Beach County.

Here’s how to shop the best deals.

* Obtain an inspection for a uniform Wind Mitigation Report, which may be free through www.mysafefloridahome.com if you have a single-family detached residence. This report, which can lead to substantial windstorm premium discounts, requires a special wind inspection. It outlines improvements that might help your home withstand hurricanes and details existing wind-related features such as hurricane shutters. For more information, visit www.mysafefloridahome.com or call (866) 513-6734. For properties that don’t qualify for a free wind inspection, ask your insurer whether you’d be eligible for premium discounts if you pay for one. Inspectors must be licensed, and the inspection filed on a special “Uniform Mitigation Verification Inspection Form.” Present a copy of this completed form to obtain the lowest windstorm insurance price quotes.

* Locate insurers writing windstorm insurance in Palm Beach County at www.shopandcomparerates.com. Click on their names for telephone numbers and Web sites and contact them for price quotes.

* Don’t feel like dialing all those insurers? Consider filling out an online form at www.fmap.org. But beware. Any information you submit goes into a statewide insurance agent database. So you could be inundated with phone calls and/or emails bidding for your business.

* Prefer to deal with your beloved insurance agent? Don’t assume he or she necessarily is getting you the best deal. Certain insurance agents may be limited to writing their own insurance lines with one exception — windstorm coverage exclusively through Citizens Property Insurance. Even independent insurance agents may not necessarily obtain the best rates. Insurance companies offer “appointments” to sell their insurance through specific agents, notes Philip Fountain at the Florida Department of Financial Services. To check insurance companies your agent can sell, click on “licensee search” at www.myfloridacfo.com/agents, and enter your agent’s name or license number — not a company. Find attractive insurance not sold by your agent? Locate an agent who sells it, or try to convince your own agent to place you. Agents, via an “exchange of business” arrangement, may be able to place a specific threshold of business with a company without an appointment.

* Carefully check the background of an insurance company you’re considering. Investigate complaints against an insurer and agent with the Florida Department of Financial Services at (877) 693-5236. Examine a company’s size and how long it has been in business. Check any financial strength ratings, and the meaning of those ratings. Goal: The strongest insurer at the lowest rate.

* Need more insurance than you’re quoted? Track down a “surplus lines company” at www.fslso.com. Click on “Looking for coverage?” to the right of the page to find agents providing surplus lines coverage. Select your county and “Homeowners HO-3.” Evaluate the financial strength of the surplus lines company by clicking on “Market Data” on the left side of the page and then, “Florida Eligible Surplus Lines Insurer Financial Data.”

Understand what can happen to your claims if your insurance company goes belly-up.

Florida technically does not back any insurance companies.

Private insurers with a “Certificate of Authority” to operate in Florida automatically are enrolled in the Florida Financial Insurance Guaranty Association (FIGA). This is a private nonprofit company, funded by the insurance industry. If your insurer fails, FIGA claims on a residential home are limited to $500,000. Plus, expect another $100 deductible. So far, Michelle Lovern, FIGA’s deputy director, says fewer than 2 percent of claims have touched its previous $300,000 limit. Assessments can be recouped through insurance policies. If funds are unavailable to pay claims, Lovern says, claims would be prorated until funds become available.

Citizens Property Insurance, according to John Kuczwanski, public information officer, is backed by the company’s ability to place assessments on all Florida homeowners policies to make up any deficit.

“Technically,” he says, “Citizens will not go under. It’s not backed by the state in general revenue. However, in the past, the Legislature has appropriated money to make up shortfalls.”

For surplus lines, there is no state guaranty fund coverage.

Policyholders would be like any creditor, according to Gary D. Pullen, executive director of the Florida Surplus Lines Service Office. Generally, the state does step in, he says.

But whether claims are fully paid depends on factors such as the value of claims and the assets available.

Gail Liberman is co-author of several books with her husband, Alan Lavine. Their latest, published by Que, is ‘Quick Steps to Financial Stability.’