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
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
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 each month.
Three insurers —
Meanwhile, several insurers are expected to declare insolvency because they will not have sufficient reserves to purchase the required levels of reinsurance before the
To stay solvent, insurers have two choices, says
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
Exceptions would be roofs less than 10 years old, which would still be covered for the 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
The proposal was approved by the Banking and Insurance Committee by a vote of 9 to 2 on
Would lenders allow a downgrade of coverage?
The insurance agents contacted by the
These terms are dictated to lenders by federal mortgage guarantors, including
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
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.
“Most likely, [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
Many insurers offering an “option”
But some insurance companies have already requested and obtained authorization to offer optional cover for damaged roofs.
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
“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.
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.
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