Check your policy: some insurers already offer home insurance plans with reduced roof coverage [South Florida Sun-Sentinel]


Will your home insurance policy pay to fully replace your roof if it is damaged in a hailstorm, tornado, fire, or by a falling tree branch during of a summer storm?

Or does your policy only cover the depreciated value of your roof, forcing you to pay thousands or even tens of thousands of dollars if you suddenly need a new roof?

It might be time to check. Several insurers have been offering reduced roof coverage as an option for the past two years. And you may have unwittingly chosen this option on your last renewal if you were looking for the lowest possible price and didn’t ask your agent to carefully explain how it was calculated.

Soon you may not have many choices. A recently filed statement Senate The bill proposes to allow insurers to substitute depreciated value roof coverage into their standard property and casualty policies. Full replacement coverage, now required under state law with these policies, would be offered at the discretion of insurers at a higher cost.

Insurers say downgrading is necessary to keep insurance affordable if your roof is over 10 years old and you need to insure your structure, contents and personal liability.


But reducing your coverage could become a problem for you and the bank that holds your mortgage. Chances are the contract you signed when you accepted your loan required you to maintain full replacement coverage for anything that could go wrong with your home.

A question of survival

Insurers and their supporters say they have little choice. Florida’s home insurance market is in a slump, with most companies in the state reporting operating losses over the past five years due to excessive claims and litigation.

The culprits, according to insurers, are a small number of large roofing contractors and the lawyers who work for them. They operated a Florida building code requirement that requires complete roof replacement if more than 25% of the roof is damaged.

Contractors send teams into neighborhoods, asking homeowners to let them inspect their roofs. If they find damage, they search old weather reports for a storm that may have caused the damage, then identify it in an insurance claim demanding full payment for a new roof, often at inflated prices. If insurers balk at claims, lawyers are ready to litigate on behalf of roofers.

Insurers say the practice is killing their industry and pushing consumer costs to unsustainable levels. Some consumers say their insurance costs more than their mortgage every month.

Three insurers — Florida Agricultural Bureau, United Property & Casualty and TypTap – recently announced that they will not be writing new business in the state for the foreseeable future. Southern Fidelity is seeking permission from state regulators to increase its average rates by 84.5% on 14,757 property and casualty policies and 111% on 44,042 home/fire policies.

Meanwhile, several insurers are expected to declare insolvency because they will not have sufficient reserves to purchase the required levels of reinsurance before the June 1 start of hurricane season, state Sen. Jeff Brandesa Pinellas County Republican, warned last week.

To stay solvent, insurers have two choices, says Paul Handerhanpresident of the consumer-oriented company Federal Association for Insurance Reform. “They can reduce coverage or increase prices,” he said.

They raised the prices. Now they are looking to reduce coverage, Handerhan said.

The impaired roof proposal, which is part of a larger insurance bill filed by Senate Banking and Insurance Committee President Jim Boydwould reimburse homeowners based on the age of their roof and the materials used to build it.

Exceptions would be roofs less than 10 years old, which would still be covered for full replacement cost, roofs that must be replaced if the structure is declared a total loss, and damage sustained in a hurricane named by the National Hurricane Center.

The proposal was approved by the Banking and Insurance Committee by a vote of 9 to 2 on February 2. opponents Annette Taddeo and Darryl Rousonboth Democratssaid they fear low-income homeowners may not be able to afford their share of the replacement cost if needed.

Would lenders allow a downgrade of coverage?

The insurance agents contacted by the South Florida Sun Sentinel said they were concerned that homeowners who accept depreciated roof coverage could risk defaulting on the terms of their mortgages, which typically require full replacement coverage.

These terms are dictated to lenders by federal mortgage guarantors, including Fannie Mae and Freddie Macwhich accounted for 63% of all loans to single-family homes in United States.

Spokesperson for Fannie Mae and Freddie Mac Contacted for this story pointed to language in their loan purchasing guidelines that requires borrowers to have full replacement coverage in place before guarantors purchase the loan from a lender.

Anthony DiMarcoExecutive Vice President of Government Affairs for the Florida Bankers Associationwork with Senator Boyd when a similar reform was proposed during the spring 2021 legislative session.

He told Boyd that other states have enacted laws allowing insurers to offer actual cash value coverage, rather than replacement coverage, for various perils, and there has been no opposition from them. by Fannie and Freddie. But these states were not as populated as Floridanor do they have as much assured property value, he said.

DiMarco said he reached out to Fannie and Freddie officials for clarification on their policy, but “we can’t get a clear answer.” He added: ‘We are concerned that yes the owner will be in compliance if they are not insured for replacement costs. We are trying to find him. »

Boyd said the legislature and the insurance industry would not allow homeowners to be put “at risk with their mortgages” if Fannie and Freddie announced that borrowers without full replacement coverage would suffer negative consequences.

“Probably, [that would mean] insurance companies would not be able to offer these coverages,” he said. “but we pay attention to it for sure.”

At this point, there is no guarantee that Boyd’s bill will be passed into law this year, or even put to a vote before the full legislature before the end of the session on March 11. So far, no member of the State House of Representatives introduced a similar bill, which would need to pass this chamber before the measure can move through the full legislature.

Many insurers offering an “option”

But some insurance companies have already requested and obtained authorization to offer optional cover for damaged roofs.

state farm has been approved by the Florida Bureau of Insurance Regulations in 2020 to offer what it called a “Roofing Services Payment Schedule Rider” as an option to make coverage for its homeowners more affordable. Since then, other companies have begun to offer the same option to their own policyholders, including Heritage, Olympus, Southern Oak, Tower Hill, American Strategic and Safety first.

One of the nation’s largest insurers, Progressive Home, emailed agents in December announcing that its depreciated roof coverage endorsement would automatically be included as a default option in policy quotes.

Progressive owns several insurance companies operating in Floridaincluding American Strategic, ASI Preferred, ASI Assurance, Progressive property insuranceand ASI Home Insurance.

Progressive spokesperson Jeff Sibel said in an email that the company expects agents to tell customers they are not required to purchase the endorsement.

“However, if they choose replacement cost coverage, for homes with roofs 11 years or older, a roof inspection must be completed within 30 days to ensure the policy will meet our underwriting guidelines. “, did he declare.

Kyle UlrichPresident and CEO of Association of Florida Insurance Agentssaid none of the members he interviewed said they had come across deprecated coverage included as a default quote for property and casualty insurance.

Dulce Suarez-Resnickvice president of the Miamibased agency Accentria Insurance, said the companies she works with were careful to mention “he’s available for a quote if the client is interested and has a discount.” That discount typically ranges from 6% to 12% on the cost of a policy with full roof replacement coverage, she said.

Corn Nancy Dominguezgeneral manager of the Florida Association of Public Insurance Adjusterssaid his office had received complaints from homeowners upset over the discovery that they did not have full roof coverage.

Many policyholders, she said, simply ask their agent to find them the cheapest coverage option and “the agent says, ‘sign here, here, and here,’ and they sign it.”

More than ever, Dominguez said, insurance customers need to ask their agent questions and read their policies carefully to make sure they understand what coverages they have — and what they don’t. Waiting until they need to file a claim can become a costly mistake, she said.

Ron Hurtibise covers trade and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at [email protected].

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