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Weathering the insurance storm

Thursday, January 07, 2010

Catherine Deshayes

Some things are out of our hands - and extreme weather is one of them - so whilst Blighty shivers in the snow, sunny Floridians live day to day with the threat of hurricanes - and home insurance premiums are soaring through the roof as a result - so just where in the USA is insuring your home the most costly and is there anything you can do about it?...

Propelled by massive pay-outs as a direct result of hurricane damage, Florida has the highest homeowner insurance premiums in the nation, according to a new industry study.

The rise in policy costs account for more than a 10 per cent increase in annual premiums. Other states are also experiencing large rate hikes.

"Most homeowners over-pay for insurance and they don't even realize it," said Kevin Wright, an insurance industry consumer advocate in Palm Beach, Florida.

"Studies show that renters pay as much as 40 per cent too much and homeowners pay up to 60 per cent more than they have to."

Officials from the National Association of Insurance Commissioners (NAIC) which carried out the study, say the increase in Florida does not include homeowners insurance underwritten by Citizens Insurance, a state run pool that accounts for properties most at risk.

In Florida the average cost of a policy is $1,534, reflecting a one-year average rise of $148. Additionally, the NAIC study did not include most private insurance rate increases in Florida. Industry analysts estimate the full increase in annual premiums to be closer to an average of 15 per cent.

Industry representatives say the study demonstrates the high cost of losses forces the insurance industry to charge more for policies where there is a higher risk of catastrophic damage from hurricanes, tornadoes, ice, hail storms and wildfires, despite compiling record profits at an average of 40 per cent per policy.

And it's not just Florida - homeowner insurance prices continue to rise across the USA, with southern hurricane-prone states reporting the most expensive premiums.

Texas accounts for the second highest rate of average homeowners insurance at $1,448 annually. The state did have the highest rate in the country until it was replaced by Florida in the study, which examined 2007 data, the latest annual information available.

Consumer groups recommend shopping for homeowners and rental policies annually to get the best price available for the same coverage, and then reading policies after they are delivered to make sure the coverage is what is wanted.

A spokesman for Texas Watch, a consumer group monitoring the insurance industry, says weak state regulation and giving into insurance lobbyists has hurt the industry.

"The industry for years has been wanting to show that Florida is more expensive than Texas. My response to that is ‘big deal', said spokesman Alex Winslow.

"So we're both paying through the nose. Being No. 2 is nothing to be proud of."

Sky-rocketing insurance premiums combined with one of the highest state property tax rates in the country has driven tens of thousands of people to move from Florida in recent years. The state's unemployment rate is also one of the highest in the country, triggering further declines in home values.

The insurance industry recorded a record $44.8-billion profit in 2005 at the height of the worst hurricane season in decades as Hurricane Katrina wiped out or damaged more than 240,000 homes in Louisiana and Mississippi.

Facing mounting criticism and calls for industry controls nationally, insurance industry executives say homeowners should shop for the best plan and price on homeowners insurance available, and to expect higher premiums in the future.

10 Most Expensive Homeowners Insurance States

State - Florida

Average Premium $1,534

Change Up 10.7%

State   - Texas

Average Premium $1,448

Change Up 2.8%

State   - Louisiana

Average Premium $1,400

Change Up 11.4%

State   - Oklahoma

Average Premium $1,054

Change Up 3.5%

State   - Massachusetts

Average Premium $1,023

Change Up 10.6%

State   - Mississippi

Average Premium $1,019

Change Up 2.1%

State   - Rhode Island

Average Premium $950

Change Up 3.4%

State   - New York

Average Premium $936

Change Up 7.7%

State   - Connecticut 

Average Premium $929

Change Up 5.8%

State   - California

Average Premium $925

Change Down 1.3%

National Average

Average Premium $822

Change Up 2.2%

Check out homes for sale in Florida at http://usa.themovechannel.com/

Written by www.nuwireinvestor.com

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