The cost of homeowners insurance rates continues to dramatically rise across Florida. Many homeowners in Florida are forced to pay insurance rate increases in the double digits due to numerous challenges in the insurance market. One of the biggest issues facing insurance companies is third parties filing inflated insurance claims for making home repairs after a hurricane or severe storm.
What is Assignment of Benefits?
An Assignment of Benefits (AOB) occurs if a homeowner agrees to transfer their insurance claims rights to a third party, such as a roofing contractor. Signing one of these forms gives the contractor the right to file claims, perform repairs, and receive insurance payments on behalf of the homeowner. This agreement is often tempting for homeowners who don’t want to be involved in the claims process. Unfortunately, many things can go wrong, and it can often lead to AOB fraud.
Understanding AOB Fraud
AOB fraud often occurs due to a building contractor filing an inflated insurance claim for repairing a home. Overestimating the value of their service allows them to pocket extra money. Insurance companies will usually recognize these inflated claims and refuse to pay the extra costs. A contractor can hire a lawyer to sue the insurance company, which results in a pricy lawsuit.
How AOB Fraud Increases Homeowners Insurance
Dealing with the fallout of AOB fraud is a major issue impacting homeowners and insurance companies. Florida property insurers paid over $15 billion in claims costs between 2013-2020, but only 8% was paid to consumers while 71% went directly to attorneys. Insurance companies must decide between paying inflated repair costs or paying lawyers to fight lawsuits.
These costly challenges are causing many insurance companies to significantly increase their rates, and some have even stopped issuing policies in Florida. Ultimately, the impact of AOB fraud causes Florida homeowners on average to pay $651 more for insurance compared to those living in Georgia and Alabama, as this number is expected to reach $866 or even higher.
Impact of Hurricane Irma
Hurricane Irma devasted Florida in 2017 with over 130 mph winds while spawning 23 tornadoes across the state. All of this destruction resulted in $50 billion in damages, which made it the most expensive natural disaster in Florida’s history. Insurance companies saw claims continue to rise even two years after the initial landfall due to a state law giving Florida homeowners the ability to file an insurance claim for hurricane damages up to three years after the incident.
The increasing number of insurance claims related to hurricanes and AOB fraud are two of the biggest factors in skyrocketing the cost of homeowners insurance in Florida. Many of the premium rates for insurance are increasing by 20%, while others have doubled their rates due to these factors. Comparing all of your different options is essential in finding the most affordable homeowners insurance policy.
Additional Concerns for Homeowners Insurance
Over 50,000 Florida homeowners were dropped by their insurance provider in 2021 due to these growing challenges in the market. Three insurance providers received state approval for these requests, which included Gulfstream Property and Casualty, Southern Fidelity Insurance, and Universal Insurance of North America. These insurance companies reported net losses in the millions, as many other insurance providers are struggling to stay afloat due to the unique challenges in Florida.
Many experts believe this trend will only continue in the near future. Legislation in Florida was recently passed to help overcome these issues facing the insurance industry. These new laws will make it more difficult to take insurers to court and also puts limits on how much money companies will pay for roof damage. One of the main goals of these changes is to make it more likely for more insurance companies to return to offering coverage in the state while providing homeowners with additional options to help lower the costs of insurance.
Tips on How to Lower Your Homeowners Insurance Premium
Dealing with the rise in homeowners insurance is an unfortunate reality for anyone living in Florida. Looking at ways to reduce your insurance costs is critical in helping you save money. One way to lower your homeowners insurance is to work with an agency to help you find the best insurance policy to meet your needs. An insurance agency will compare quotes from all of the major insurance providers to ensure you receive the best deal available.
You can also lower the cost of homeowners insurance by raising your deductible. Understanding the details of your policy will make it easier for you to decide how much coverage you need. Installing storm shutters or impact glass throughout your home is especially beneficial in providing you with additional protection against hurricanes. These investments can lower your insurance while providing you with greater peace of mind.
Reach Out to Wellcovered Insurance Today to Learn More
Wellcovered Insurance is a top-rated insurance agency that partners with over 30 insurance carriers across the nation. Our experienced team proudly serves clients in Volusia and Seminole Counties. Providing a personalized service while meeting the different needs of our clients is always a top priority.
We will compare numerous providers to ensure you find insurance that best matches your needs. Our company specializes in many types of insurance, such as homeowners, rental, condo, car, boat, flood, general liability, and much more. Providing top-quality customer support is always our concern, as we are happy to answer any of your insurance questions, and we will return your missed phone call as soon as possible.
Receiving an auto quote only takes 15 minutes, while quotes for homeowners insurance take between one to two business days. Our company also maintains a very active role in the community, as we are a member of the DeLand Breakfast Rotary and the West Volusia Regional Chamber of Commerce.
Contact Wellcovered Insurance to find the right insurance to meet your needs!
