Since hurricane Andrew in 1991 and the multiple storms of 2004 and 2005, buying home insurance has been very costly for Floridians. I can remember selling policies for less than $200 per year and it included unlimited replacement cost AND sinkhole coverage. Those days of premium and coverage are long gone.
Several companies have come to Florida to satisfy the need for home insurance coverage, only to be taken over by the insurance department just a few years later. It is frustrating for consumers who want quality coverage at a competitive price. Many people have taken to the Internet to find such a policy; however, in today’s misperception of a lower price means a better policy, consumers have fallen prey to what I call the “insurance stripper”.
My definition of an insurance stripper is someone who removes valuable internal coverage just to sell a policy. In my 25 years of being in the insurance business, never did I think I would use the words – “insurance and stripper” in the same sentence!
We used to see very minor rate differences between agencies, but now we are seeing hundreds of dollars even with the same company. Many consumers don’t realize that coverage for coverage and company for company, the premiums should be identical from all agents. Insurance rates are regulated and must be approved by Florida Financial Services (the insurance department). When you see rates from the same company vary by $500 or more, it is likely you are getting a “stripped” policy. Stripper agents will underinsure your home, remove replacement coverage from the contents, lower contents limits, remove detached structures coverage, and reduce liability coverage to $100,000. To me, this is like someone buying a nice shiny car; it looks great inside and out, but when they go to start the car, it does not go anywhere because it does not have an engine!
Here is an example of what happens at claim time should you purchase a “stripped” policy that does not have replacement coverage on your contents. Insured has a lighting strike and has damages to a TV, a computer, refrigerator, and the A/C compressor unit. The cost to replace these items could easily be over $8000. But if replacement cost coverage has been removed, you would receive the depreciated value, which could easily be less than $1750. In a nutshell, it means that the insurance company is going to give you “garage sale” prices for your personal possessions. Things get even worse when a home is underinsured!
When it comes to purchasing home insurance, do your research. Call an agent that is recommended to you. When you get a quote, ask lots of questions. Compare the coverage. And remember, it is just as important to know what is not covered, as it is to know what is covered.