Replacing HomeInsurance : who to pick?

[radhak]

Like many others in So Fl, my insurance company went belly up, and Citizens (state org) picked up my policy till its renewal time, which happens to be April 29th. My earlier insurance was $2900 per year (on a $400K, 4/2 single home). (My flood insurance costs $300 separately, and that got replaced at the same rate already).

I have asked around and have got three different quotes :

a. My earlier agent has mailed me a quote from HomeWise for $3700.
b. Allstate (my auto ins agent) sends me a quote from a 'Royal Palm Insurance' for $2900 (yup, close to my current rate).
c. Another agent sent me a quote from Northern Capital Insurance for $3000.

As far as I can tell, the terms and conditions in all are same or similar (HO3 with same coverages, etc). So how do I pick the best?

Looks like I can reject the highest quote outright (yes?); but the other two - I hear that Royal Palm is a new company, created just year in response to the collapse of the other companies here; does that make it a bad choice? Any chance I might get stuck with the bill if any mishap does occur, if this new-kid-on-the-block tries to cut-and-run?

[LCHIEN]

Here's some advice from Consumer's reports
(this may not directly answer your question but has some good advice for people in your shoes).


What if your homeowners insurer calls it quits?

After collecting your premiums year after year, a homeowners insurance company can decide it doesn't want to do business with you -- or, for that matter, anyone in your community--anymore. This is a situation facing thousands of New York metro-area homeowners who learned in early February that they may be getting the heave-ho from the "good hands" of Allstate Insurance.

Allstate stopped writing new homeowners insurance policies in the eight-county region covering New York City, Long Island, and Westchester on Jan. 1. Now the company says it will also step up the pace of policy nonrenewals in the region.

Allstate, the largest home insurer in New York, cited its "catastrophic exposure" to losses if a severe hurricane were to hit New York's coastal areas. Sen. Charles Schumer (D-N.Y.) says the claim is "bogus," citing National Oceanic & Atmospheric Administration (NOAA) statistics predicting that a category 4 hurricane or higher will hit New York City only once every 500 years and Montauk, Long Island once every 130 years. He thinks Allstate's move is nothing more than a political ploy to create a "false crisis" that will trigger public outcry for a taxpayer-financed fund indemnifying insurers from catastrophic losses produced by hurricanes and other major disasters.

But it raises questions about what homeowners may face if more companies start taking a closer look at cutting their exposure to potential losses. The industry periodically goes through so-called hard markets in which carriers take a tougher stance on writing and renewing policies. The last hard market--sparked by a decade of higher-than-normal bad weather losses, a sour stock market, and rising construction costs--ended three years ago.

Some may worry that other New York insurers may follow Allstate's lead. But Bob Hunter, director of insurance at the Consumer Federation of America, doesn't expect the problem to spread to other insurers or other states, although Allstate may pull out elsewhere. "Allstate has consistently been a company that seems to do irrational things in the wake of hurricanes," Hunter says.

Insurers typically limit their potential hurricane losses by charging percentage deductibles for storm damage based on a home's insured value rather than the traditional set-dollar amount. Thus, on a home insured for $300,000 with a 5 percent deductible, the owner is on the hook for the first $15,000 in damages. Percentage deductibles for storm damage range from 1 to 15 percent.

So what if you're an Allstate customer in New York? Allstate wouldn't say how many customers' policies would not be renewed beyond "a small percentage." Typically, New York insurers' nonrenewal rate is well below what the state allows: up to 4 percent. Given Allstate's 450,000 policyholders in the eight counties affected, up to 18,000 customers could face nonrenewal this year.

If you get caught by an insurance-company pullout, here's what you need to do:

• Complain to the state insurance department if you suspect unfair treatment. Your policy can't be canceled, but the insurer can decide to not renew at the end of the typical three-year coverage period. A rise in complaints can trigger a market conduct examination by the New York State Insurance Department. The department's hotline number for coastal homeowners is 800-300-4593.
• If you want to stick with Allstate, avoid filing small or numerous claims. This is our standard advice for all homeowners, and Allstate says claim frequency is one leading factor it looks at when targeting nonrenewal.
• Switch to the competition. "There is no shortage of home insurers," says Wayne Cotter, director of research at the New York State Insurance Department. "These consumers could definitely go somewhere else." You can shop around efficiently online at www.insure.com, one Web site that has pledged to abide by the Consumer Reports WebWatch standards of disclosure. When we called State Farm, number two in homeowners insurance in New York, spokesperson Tamara Sperling says that this is possibly an opportunity to gain new customers. "Is there a potential for another hurricane? Of course, but we don't look at that as something to be afraid of," Sperling says. "We're in the business of managing exposure." In our latest ratings of homeowners insurers, published in September 2004, Consumer Reports readers judged State Farm as giving them fewer problems with their claims than Allstate.
• Consider dropping your Allstate auto insurance. Allstate offers a nice 10 to 15 percent multiline discount to customers who have its homeowners and automobile insurance. Homeowners insurance nonrenewals won't get to keep that discount on their auto insurance, says Mike Trevino, an Allstate spokesman. So while you're shopping for a new homeowners policy, be sure to ask about the multiline discount at prospective insurers and be ready give your auto insurance business to the carrier that provides your homeowners insurance.

[Knottscott]

My insurance company has been Amica for car and home for over 20 years. They've always been awesome and have had extremely competitive rates everytime I've checked. Once after a bad wind storm, they called me to see if I had any damage. Their real world habits are very much like their commercials suggest. I'd definitely give them a call if they're in your area.

[Alex Franke]

I recommend USAA if you qualify.

[tedkitch]

I'll second USAA, check to see if you qualify. Their customer service is great!

[MikeMcCoy]

I don't know about south Florida but USAA won't write any new policies in the panhandle of Florida. That's true of just about any coastal area anymore. I'm getting them to write a policy here outside of Charleston but I'm only able to get it because I had my renters insurance through them while waiting on the house to get finished.

[Jeffrey Schronce]

I note that HomeWise indicates they are an A rated carrier by Demotech. Demotech ratings mean preciously nothing other than they obviously do not have an A rating with AM Best, the industry standard in financial and operational strength rating. I also am not a huge fan of the upper management team. The CEO came from Kemper, which was run into the ground an acquired by a much small company, Unitrin.

Royal Palm, another Johnny come lately with a A rating from Demotech. Personally, I wouldn't have ANY coverage with Allstate. In both of my insurance related businesses they are the only company I refuse to deal with, unless of course providing expert witness testimony against them due to their piss poor claims handling practices. Oh my, did I say that? Check an independent agent that has The Hartford or Travelers for superior auto coverage at a superior price.

USAA is not accepting new business in FL. They will do an occasional re-write of coverage (ie your current home is with them and you buy another).

Amica does not write new coverage for HO in FL. I think their auto capacity is limited as well.

Most insurance companies are not really risk bearing insurance companies in FL. They simply reinsure all their exposure through a large reinsurance company such as XL, Swiss Re, etc. They then handle policy distribution, service and claims payment. All claims paid are reimbursed by the reinsurance company. The difference between premium collected from policy holders and the premium paid in reinsurance + administration + selling cost = profit (if any).

In my opinion, unless you can find that rare coverage through a real carrier such as Travelers, The Hartford, Nationwide, State Farm, etc (which you are not) all these “take out” companies are all the same. I would shop on price and coverage application. By coverage application make sure definitions of the policy are the same. “Named Storm”, “Hurricane”, “Wind & Hail” are all definitions that need to be evaluated. I assume by this point (been about 7 years since I was a commercial analyst in FL) that the state department of insurance and case law have standardized the language and definitions. Of course this is FL that we are talking about so logic is out the window.

Reviewing the article posted in this thread it really won’t apply to you. Complaining to the insurance department is pointless. They are aware of the problem. Sticking with Allstate is not an option, even if it was an option! LOL! You are unlikely to find a company that will write both auto and home. Yes, you can find the same agent, but as stated earlier there are few real insurance companies in FL.

Note : Reviewed HomeWise and they do not present enough information for AM Best to rate them. Same for Royal Palm.

Note : I have no idea why your flood premium is $300! No one in the state of FL should be under $1000! Also, you are probably aware, but your flood coverage limit for your dwelling is likely less than $400,000 unless you have an excess policy. I think the max dwelling under the federal flood is around $320,000 right now.

Edit : There is ZERO chance you will get stuck footing the bill for damages should the new company go insolvent. State guarantee fund assures that.

[lcm1947]

I've been an insurance agent for 23 years now and while I can't actually advise you I will make some comments that you may think about. First it is a real pain to have a company drop out of the market place. True they (the state ) assigns the failing companies policies to another company -if they can, not a sure thing. But it is especially a pain if you have a claim pending with the failed company. One of our Texas companies recently went belly up and one of our clients had just filed a fire and water damage claim and he went through **** getting anybody to even come out and look at the claim. There was nobody around that he or even I for that matter could even reach for about a month. Finally he got the claim handled but that poor guy aged 10 years worrying about it. Anyway, so I would stick to a large, known carrier in your area. To me as long as you stick to a large carrier I'd be more concerned about the type of policy you buy. Now I'm not familiar with Florida but in Texas there are basically three types. There are actually others but you wouldn't pick them due to two of the types being way too expensive for what you get or the other that I will call a junk policy. This term junk policy is not an insurance term by the way it's just what I call them because in my opinion they are junk. This one is known as the HOA. So back to the other three that I would look into. They are the HO3, HOA Plus ( not to be confused with the plain HOA one ) and the HOB. The HOB is the best hands down and more then likely but not necessarily the higher priced of the three but again in my opinion well worth it. I would pay $1,000.00 more per year for one. The next two are about the same as far as coverages go but then it gets a little complicated. With either of these last two you can add endorsements to them beefing them up into a better policy - coverage wise. They however, even beefed up aren't as good of a policy as the HOB and don't let an agent tell you otherwise. They may be beefed up but that don't make them an HOB. Anyway back to the endorsements. This is where you need to check each endorsement. Endorsement by endorsement. Again referring to the HOA Plus and the HO3 each of these policy types has their own unique coverages. Example; The HOA + may have protection for slab damage where the HO3 doesn't but you may be able to purchase that slab damage by endorsement. If so then add that endorsement price to the basic policy price. Anyway keep adding endorsements to both policies trying to get them to be identical. Once you arrive at that figure then start adding the endorsements if any that you also want like maybe extra protection on jewelry or guns, etc. Then it's a simple matter of comparing the prices. So there you have it. Hopes it helps. It's a lot of work but you are the only one that can decide. Without trying to be ugly the best agent in the world is going to push his policy if it's the only type he sells. And he'll actually justify it in his mind and be able to sleep at night. Your best bet would be to only work with independent agents and then only if that particular agent has all three type policies to sell. Otherwise you won't get a fair comparison. One last note. One particular company ( carrier ) won't offer all three type policies. They will normally only have one type be it an HO3, HOA plus or HOB. That's the main reason you need to stick to an independent agent. He'll have to be able to sell through at less three different companies to be able to offer you all three types. Good luck.

[Jeffrey Schronce]

There was nobody around that he or even I for that matter could even reach for about a month. Finally he got the claim handled but that poor guy aged 10 years worrying about it.

Anyway, so I would stick to a large, known carrier in your area. To me as long as you stick to a large carrier I'd be more concerned about the type of policy you buy.

Now I'm not familiar with Florida but in Texas there are basically three types. There are actually others but you wouldn't pick them due to two of the types being way too expensive for what you get or the other that I will call a junk policy. This term junk policy is not an insurance term by the way it's just what I call them because in my opinion they are junk. This one is known as the HOA. So back to the other three that I would look into. They are the HO3, HOA Plus ( not to be confused with the plain HOA one ) and the HOB. The HOB is the best hands down and more then likely but not necessarily the higher priced of the three but again in my opinion well worth it. I would pay $1,000.00 more per year for one.

Two problems.

One, there is no large national carrier writing new business in FL at any price. No State Farm, Allstate, Hartford, Travelers, Safeco, etc. This has resulted in small "take out" companies, ie they take you out of the state wind pool. All claims are guaranteed by the state. FL will take over an insolvent company and do a much better job than what your friend went through in TX.

Second, while you give a good analysis, TX policies are different from every policy in the country! HOA, HOB, etc don't exist in other states. I have handled TX issues and agree HOB is the way to go. However, as I noted earlier this applies ONLY to TX.
In all other states HO-3 with replacement cost dwelling and contents is the way to go. Gives you "all risk" coverage on dwelling (of course subject to exclusions and modifications) and broad named perils on contents.

[radhak]

Thanks a lot everybody for your help, and great advice!
And thanks for the detailed analysis Jeffrey (and lcm).

As duly noted, So-Fla does not allow too many options - not much around!

JS, while you commented on the ratings for the others, I find that I am unable to see the ratings for Northern Capital Insurance; maybe I'll just pick it and turn into a praying person...

I double-checked on the flood insurance : my premium is $349, plus a $30 admin fee = $379. The coverage is for $250K dwelling and $100K of content. Jeffrey's expectation of $1000 for flood is making me nervous now...

[Jeffrey Schronce]

Thanks a lot everybody for your help, and great advice!
And thanks for the detailed analysis Jeffrey (and lcm).

As duly noted, So-Fla does not allow too many options - not much around!

JS, while you commented on the ratings for the others, I find that I am unable to see the ratings for Northern Capital Insurance; maybe I'll just pick it and turn into a praying person...

I double-checked on the flood insurance : my premium is $349, plus a $30 admin fee = $379. The coverage is for $250K dwelling and $100K of content. Jeffrey's expectation of $1000 for flood is making me nervous now...

Don't worry, flood is a very different breed of animal. All flood is underwritten and backed by FEMA through the Federal Flood Insurance Program. The government does not sell directly to public, rather they will get insurance "companies" to put their name on it and admin the policy and claims management. In exchange they give the company about 22% of your premium. The company gives about 15% of that to the agent for sales, and keeps a nice 7% risk free profit! Your flood insurance policy will be the same with any company. You will find that most companies will offer flood, even those who don't write property, as it is pure profit!

$379 just seems very good. I would pay that for $250k here in central PA, away from the river.

Couldn't find a lot of info on Northern Capital right now. I do know it was started 08/15/2006, so it is very new. It is likely set up just like the other 2. Again, all 3 are admitted by FL DOI, thus guaranteed by the state (check limit of state guarantee fund).