We are all aware of what’s going on in today’s real estate marketplace. There is no way that you can escape the news. It’s all over on the radio, television and in print. So where do you stand?
Firstly, the situation is not going to change anytime soon. There are too many factors that have contributed to our present market. One of the greatest, that most people are not aware of, is that of the mortgage lending business. This has greatly contributed the our present set of circumstances.
A little history. A long time ago when someone took out a mortgage, they generally had a relationship with their lender, who more often than not was their banker. The banker knew of their ability to repay a loan and lent money on this criteria. The banker also kept and serviced that loan for the life of that particular mortgage.
Well, the industry changed greatly in the past twenty years. Now, the originating lenders take the mortgages that they’ve made and then bundle them up and sell them to investors. Thus, giving the original lender money to go back out and sell more mortgages. This is great in that it brings more available money back into the marketplace. The downside is that the original lender no longer has the risk of carrying that loan. So, therefore, criteria became quite lax for procuring loans.
This is why we are seeing so much trouble with the subprime market. Too many loans were made to people who could marginally afford a home. With interest rates rising so has many adjustable rate mortgages and this further pushed many more people into that group. They couldn’t afford the higher payments and especially with the addition or higher insurance rates & property taxes.
Because so many of these loans were heading towards default, that it why we are seeing a collapse in the subprime market. It used to be that you could find a loan for someone with credit scores of less than 580. Now, that the subprime market is drying up, it is difficult to find a loan for someone with a FICO score under 620.
This fueled a lot of the buying and selling that we saw over the past several years. This, in addition to the fact, that a lot of people as they saw the prices of real estate moving up so quickly wanted to get in on the action also. Unfortunately, a lot of these people should not have. Many used their available funds or even home equities in their primary residences to purchase second homes or rental properties. When they could no longer afford these properties, they tried to sell them, but found that they couldn’t at a profit.
Many also used the increased value of their homes as a sort of spending account. Since incomes were not increasing relative to the value of their property, they would take money out, utilizing home equities, and use this money to buy cars, trips, etc.
But, this had to stop and it did! We were finding more homes languishing on the market. The builders were still building at an expanded pace. Therefore, even more homes on the market. The statistics show that most of these builders made profits last year, but that is now changing. Many, if not most, have seen losses this year. Many builders have stopped building speculation homes.
The combination of all of the things that I’ve just written about has contributed to the glut of properties available for sale. And yes, has driven down the price of homes. If you purchased a home within the last two years, you will find it quite difficult to sell it now at a profit and in most cases breaking even, if you are lucky.
Yes, there are many more factors that have also contributed to our state of affairs, but this is to just give you a general overview. So, now to the title of this blog.
It is definitely a buyer’s market and will remain so for quite some time. Right now in the two counties that make up the majority of the Greater Orlando area, there are over 20K single-family homes, condos, townhomes & villas for sale. This, when in what might be considered a normal market, when there was much less than 1/3 of that number of available properties for sale.
Buyers have a wide selection of properties to look at & choose from. Never has it been greater & especially when you note that the builders are offering such great bargains. Some even $100K and more off of the selling price. Others offering discounts, closing incentives & even a Harley-Davidson in addition. I’ve recently seen a home that was almost 2000sf with a starting price of approximately $250K. And this home wasn’t in the boonies or even near to such, it was right in the metro area.
Now, to the sellers. Unfortunately, there are many that just have to sell. They have to move whether it be for a job transfer, familial reasons, health, etc. These people have no choice. What I’ve stated over and over for these people is that you have to show Price & Value. Your home has to be in tip-top shape. People do not want homes that they have to do work on. There are too many others out there & they will just go to the next one. People are not going to overpay for a property. And this is where it also comes in – sellers have to be realistic in their expectations and pricing. 2005 is a long time ago and has nothing to do with our present real estate market.
Some may read this and think that I am a pessimist. I am not by any means, or at least try not to be. I consider myself a realistic optimist. We are still selling homes, but granted, they are selling at levels that we saw in the late 1990’s and early 2000’s. There is over a 16-month supply of available homes on the market.
Real Estate is a great investment, but it has always been meant as a long-term investment. Not, the short-term one it was considered in the recent past. It is no longer the cash cow that we saw through the past several years. There is no real estate bubble that we are going to see burst. But at the same time, you are not going to see lenders utilizing the line-up & sign-up routine of the past for mortgages. The criteria for such has been tightened.
One of the things that quite concerns me is what is going to happen when Wall Street feels the effects of the subprime market. Are we going to be asked to bail them out as we have with property insurance companies, etc? I hope not, they took on the risk & that is where it should stay. It’s not the public’s responsibility to bail out all of these companies. We, as individuals, cannot afford that.
Just remember – Price & Value. If you can show that, you can sell your home.
Until next time – Marc It Sold!
Showing posts with label insurance. Show all posts
Showing posts with label insurance. Show all posts
Thursday, July 5, 2007
Wednesday, June 13, 2007
Property Insurance and a Little Bit about Taxes
Well, the Legislature has reconvened for a special session & as I may have stated previously, I’m very concerned that we will not see anything good come out of this. There are many reasons why I state this. Firstly, the proposed plan, which is somewhat different from what I’ve previously blogged about, is still inadequate. And there is obviously quite a bit of legislators that feel this way as well. Many of the legislators, including some Republicans, are quite miffed that this currently proposed plan was worked out basically behind closed doors. Marco Rubio, the House Speaker from Miami, stated basically that they have a choice of the proposed plan or no change to the current system. As I’ve stated before, it just seems that he looking to make a name for himself. He’s already proposed a couple of plans which did not merit anything more than a cursory notice.
It’s quite sad because the only victims here are the people of the State of Florida. This is true with the tax situation and what we’ll soon talk about, property insurance. But, before I go there, there is one major note that should be brought to your attention. The current proposed property tax seems to be only affording most of us a mediocre savings that would basically be obliterated within four to five years time. And as I’ve stated before, I have a major issue with our legislators just replacing one flawed system with an equally flawed system. What’s the purpose except for them to say “Look at what we’ve done for you!” and most likely not be in office when we have to repair that system. Go figure!
Anyway to Property Insurance and Citizens Property Insurance Corp, in particular. The long and short of this, and you may have read this in a previous blog of mine, Citizens was created by the Florida legislature basically to protect Floridians and offer policies to homeowners who could not buy property insurance elsewhere on the open market. Many insurers have left the state, especially in writing policies on property.
The problem here is that Citizens has been allowed to grow, recently, way beyond its proposed structure. Firstly, it was underfunded at the beginning and we’ve found ourselves having to bail it out twice already. We pay for this everytime we pay our insurance whether it be to Citizens or another carrier. At present, Citizens is being told that it has to rollback it’s rates to that of 2006. Sounds great to the consumer, but what happens if there is an unfortunate catastrophe in the State of Florida. Hum, let’s think! Oh, I know, we’ll be bailing Citizens out again. This has to stop! It is not fair to the people of this state to consistently bail this company out of bankruptcy.
Additionally, as I was previously alluding to, Citizens has been allowed to go way beyond it’s scope. They offer cheap insurance to basically irresponsible coastal developers. They build these large high-rise condos on the beach in areas that are prone to disasters. Does this make good business sense to anyone? Please let me know. Let me also mention, most carriers would not insure a project like this or, at the very least, at the rates that Citizens is charging these developers.
Let’s take this one step further, so they build a coastal high-rise. They sell these units and now the unit owners and the condo association need insurance. Since other carriers would probably not be interested in insuring this property in the first place, where do you think most of these people will wind up purchasing a policy from? You got it – Citizens. Do you possibly see a problem here?
The other problem is that people in the state’s interior will be paying for this mess and they do not deserve that responsibility. Our legislators need to take action and do it now! They need to be more responsible about the development of our coastlines. They need to be fiscally responsible to the people, not big business.
Please do not get me wrong. I am not a radical or subversive or whatever may come to mind in that respect. But, I do firmly believe if you have a problem or a broken system it needs to be repaired. Just as if you had a broken tooth, you’d go to the dentist. You just wouldn’t let it remain open and possibly abscess.
This brings me to another insurance matter that is being handled incorrectly also. It seems that the Legislature is planning on allowing our No-fault insurance for automobiles lapse when it becomes due in October. The reason behind this supposedly is that there is too much corruption in the fact of people abusing the system. Under the current system, you must carry at least $10K of Personal Injury Protection (PIP) coverage. Basically, the elimination of this will allow people to drive uninsured. This will only create a greater strain on us & also our hospitals. Yes, again the system needs to be fixed. It is definitely flawed and rank with fraud, but the elimination of it is not the correct answer. Deal with the fraud. Eliminate that, but not the whole concept.
Again, thank you for reading my rantings and ravings.
Until next time – Marc It Sold!
It’s quite sad because the only victims here are the people of the State of Florida. This is true with the tax situation and what we’ll soon talk about, property insurance. But, before I go there, there is one major note that should be brought to your attention. The current proposed property tax seems to be only affording most of us a mediocre savings that would basically be obliterated within four to five years time. And as I’ve stated before, I have a major issue with our legislators just replacing one flawed system with an equally flawed system. What’s the purpose except for them to say “Look at what we’ve done for you!” and most likely not be in office when we have to repair that system. Go figure!
Anyway to Property Insurance and Citizens Property Insurance Corp, in particular. The long and short of this, and you may have read this in a previous blog of mine, Citizens was created by the Florida legislature basically to protect Floridians and offer policies to homeowners who could not buy property insurance elsewhere on the open market. Many insurers have left the state, especially in writing policies on property.
The problem here is that Citizens has been allowed to grow, recently, way beyond its proposed structure. Firstly, it was underfunded at the beginning and we’ve found ourselves having to bail it out twice already. We pay for this everytime we pay our insurance whether it be to Citizens or another carrier. At present, Citizens is being told that it has to rollback it’s rates to that of 2006. Sounds great to the consumer, but what happens if there is an unfortunate catastrophe in the State of Florida. Hum, let’s think! Oh, I know, we’ll be bailing Citizens out again. This has to stop! It is not fair to the people of this state to consistently bail this company out of bankruptcy.
Additionally, as I was previously alluding to, Citizens has been allowed to go way beyond it’s scope. They offer cheap insurance to basically irresponsible coastal developers. They build these large high-rise condos on the beach in areas that are prone to disasters. Does this make good business sense to anyone? Please let me know. Let me also mention, most carriers would not insure a project like this or, at the very least, at the rates that Citizens is charging these developers.
Let’s take this one step further, so they build a coastal high-rise. They sell these units and now the unit owners and the condo association need insurance. Since other carriers would probably not be interested in insuring this property in the first place, where do you think most of these people will wind up purchasing a policy from? You got it – Citizens. Do you possibly see a problem here?
The other problem is that people in the state’s interior will be paying for this mess and they do not deserve that responsibility. Our legislators need to take action and do it now! They need to be more responsible about the development of our coastlines. They need to be fiscally responsible to the people, not big business.
Please do not get me wrong. I am not a radical or subversive or whatever may come to mind in that respect. But, I do firmly believe if you have a problem or a broken system it needs to be repaired. Just as if you had a broken tooth, you’d go to the dentist. You just wouldn’t let it remain open and possibly abscess.
This brings me to another insurance matter that is being handled incorrectly also. It seems that the Legislature is planning on allowing our No-fault insurance for automobiles lapse when it becomes due in October. The reason behind this supposedly is that there is too much corruption in the fact of people abusing the system. Under the current system, you must carry at least $10K of Personal Injury Protection (PIP) coverage. Basically, the elimination of this will allow people to drive uninsured. This will only create a greater strain on us & also our hospitals. Yes, again the system needs to be fixed. It is definitely flawed and rank with fraud, but the elimination of it is not the correct answer. Deal with the fraud. Eliminate that, but not the whole concept.
Again, thank you for reading my rantings and ravings.
Until next time – Marc It Sold!
Friday, May 18, 2007
Property Insurance – Our Nemesis II
Unfortunately here, in the State of Florida, we have a couple of items that are creating havoc with our economy and even forcing some into foreclosure. But that is another story and those people need to take blame for getting into something that they shouldn’t have in the first place.
Anyway, back to property insurance. Here’s an example. I know some people in western Oregon. They have a home of about 4000sf on many acres with out buildings, etc. Their homeowners insurance runs them $1000 a year plus another $500 for earthquake insurance. I on the other hand have an approximately 1500sf home on about 1/3 or an acre and am paying approximately the same for my homeowners insurance.
I need to backtrack a little to a previous post where I wrote about insurance companies and actuaries & how they had to know what they were getting into and the rates that they have been charging. Well, I’ve come to learn a little more about the history of homeowners insurance in Florida.
Insurance companies competed by keeping their rates low & then came Hurricane Andrew. After that catastrophe, most had huge losses but 11 of them went bankrupt. So the remaining companies started raising rates to match their level of risk & cancelling policy renewals.
Then our government decided that we needed to do something about this and passed laws to keep our insurance rates down. And then, finally, they created Citizens Property Insurance. This was to be the insurer of last resort. Remember this as we come back to that in a little while.
Well, lo & behold, then came the hurricanes of ’04 & ’05. Unfortunately, this bankrupt some companies as well. Oh yes, I forgot to mention, one of those companies was Citizens Property Insurance. But, don’t worry, we got taxed to bail it out. It even states on everyone’s policies in the State of Florida something to the effect of “Citizens Property Insurance Assessment, Florida Catastrophe Fund Assessment, Citizen’s Recoupment Fee,” etc.
Now, our Governor is asking that these insurance companies pass the buck or I should say the bill along to their customers outside the state of Florida. Additionally, they are allowing Citizens to grow and they were allowing them to raise their rates as well, but then enacted legislation to freeze their rates. They were giving Citizens the go ahead to compete head on with other insurers so they were no longer the insurer of last resort, when you couldn’t find insurance elsewhere.
So now, Citizens has basically gone belly up twice and, as I’ve stated, we are paying for this. It may sound good that there is an insurer out there with affordable rates. But what’s ultimately going to happen is that they are going to grow into probably the largest insurer in the State of Florida and when another unfortunate catastrophe hits this state we are all going to be left with the bill. It’s just a matter of time before Citizens Property Insurance goes bankrupt again.
Citizens Property Insurance is a problem that needs to be addressed quickly!
Until next time – Marc It Sold!
Anyway, back to property insurance. Here’s an example. I know some people in western Oregon. They have a home of about 4000sf on many acres with out buildings, etc. Their homeowners insurance runs them $1000 a year plus another $500 for earthquake insurance. I on the other hand have an approximately 1500sf home on about 1/3 or an acre and am paying approximately the same for my homeowners insurance.
I need to backtrack a little to a previous post where I wrote about insurance companies and actuaries & how they had to know what they were getting into and the rates that they have been charging. Well, I’ve come to learn a little more about the history of homeowners insurance in Florida.
Insurance companies competed by keeping their rates low & then came Hurricane Andrew. After that catastrophe, most had huge losses but 11 of them went bankrupt. So the remaining companies started raising rates to match their level of risk & cancelling policy renewals.
Then our government decided that we needed to do something about this and passed laws to keep our insurance rates down. And then, finally, they created Citizens Property Insurance. This was to be the insurer of last resort. Remember this as we come back to that in a little while.
Well, lo & behold, then came the hurricanes of ’04 & ’05. Unfortunately, this bankrupt some companies as well. Oh yes, I forgot to mention, one of those companies was Citizens Property Insurance. But, don’t worry, we got taxed to bail it out. It even states on everyone’s policies in the State of Florida something to the effect of “Citizens Property Insurance Assessment, Florida Catastrophe Fund Assessment, Citizen’s Recoupment Fee,” etc.
Now, our Governor is asking that these insurance companies pass the buck or I should say the bill along to their customers outside the state of Florida. Additionally, they are allowing Citizens to grow and they were allowing them to raise their rates as well, but then enacted legislation to freeze their rates. They were giving Citizens the go ahead to compete head on with other insurers so they were no longer the insurer of last resort, when you couldn’t find insurance elsewhere.
So now, Citizens has basically gone belly up twice and, as I’ve stated, we are paying for this. It may sound good that there is an insurer out there with affordable rates. But what’s ultimately going to happen is that they are going to grow into probably the largest insurer in the State of Florida and when another unfortunate catastrophe hits this state we are all going to be left with the bill. It’s just a matter of time before Citizens Property Insurance goes bankrupt again.
Citizens Property Insurance is a problem that needs to be addressed quickly!
Until next time – Marc It Sold!
Friday, March 16, 2007
Why do people think we are Stupid?!?
It's just absolutely amazing to me that people must think we are stupid. Here are two things in particular that I've just come across.
My last post had to do with the Florida property tax issue. This morning I received an email from a realtor in Miami that must be a supporter of Marco Rubio, the House Speaker. Let me just give you a brief history here. He is proposing that we eliminate the property tax on primary residences & reduce the property tax on other properties by 20%. To offset this revenue loss he is wishing to increase the state sales tax by 2.5%. Ok, so here's what their website states, "Lower taxes and lower tax rates on apartment buildings and other businesses will reduce rents and keep rental housing affordable." Who is kidding whom here? Let's say you have a landlord who is receiving X dollars for rent on a unit & the property tax on that unit is reduced. Do you think that this landlord will reduce the rent below the X dollars that are getting now? But yet, there they have it in writing trying to persuade you to their point of view. They will get some people to believe them & I guess that this is enough - that is what they are after.
OK, enough of that one. Here's another I encountered the other day from an insurance agent. I decided to shop around because the insurance on my primary residence just went up way too high and too fast. Again, a brief history, I decided to change agents a couple of years back. The main reason for this is that I needed an Umbrella Policy to better protect my interests & myself. Two years ago, I paid $860 yearly insurance on my primary residence, which was higher than I'd previously paid, but was willing to do so. Last year, this increased to $1030 & this year my renewal came in at $1453. I had one claim back in '08 & the home is just over 10 years old.
So now to the story, I was shopping around and speaking to an agent. She said to me that our rates would not be this high right now if insurers were charging the correct amount all along. She further stated that our insurance rates in Florida have been much too low for too long. OK, so here's my issue with these statements. Insurers have actuaries work for them. These mathematicians create formulas that the insurers use in rating risk. Risk is the underlying factor in insurance. Things are cyclical - whether we are talking about the weather, life, real estate - it really all is very cyclical. So, getting back to insurers, do you think that they are not going to charge us enough to cover their risk? Seriously, now. This is what this woman was telling me.
The insurers ran this garbage back after Andrew in '92 and again after all of the '04 hurricanes. Granted, '04 was an anomaly, but how many years did we go without any severe storms that cost the insurance companies. If you look at their books, you will note that they are still making a profit.
Anyway, enough of my ranting! I just really ticks me off when people think we are stupid. It's fine to get your point across, but be realistic. Don't make it out that we are stupid! That is just such a lack of respect & that is something that I will not deal with. We all deserve respect!
Thanks again for listening to my meanderings.
Until next time - Marc It Sold!
My last post had to do with the Florida property tax issue. This morning I received an email from a realtor in Miami that must be a supporter of Marco Rubio, the House Speaker. Let me just give you a brief history here. He is proposing that we eliminate the property tax on primary residences & reduce the property tax on other properties by 20%. To offset this revenue loss he is wishing to increase the state sales tax by 2.5%. Ok, so here's what their website states, "Lower taxes and lower tax rates on apartment buildings and other businesses will reduce rents and keep rental housing affordable." Who is kidding whom here? Let's say you have a landlord who is receiving X dollars for rent on a unit & the property tax on that unit is reduced. Do you think that this landlord will reduce the rent below the X dollars that are getting now? But yet, there they have it in writing trying to persuade you to their point of view. They will get some people to believe them & I guess that this is enough - that is what they are after.
OK, enough of that one. Here's another I encountered the other day from an insurance agent. I decided to shop around because the insurance on my primary residence just went up way too high and too fast. Again, a brief history, I decided to change agents a couple of years back. The main reason for this is that I needed an Umbrella Policy to better protect my interests & myself. Two years ago, I paid $860 yearly insurance on my primary residence, which was higher than I'd previously paid, but was willing to do so. Last year, this increased to $1030 & this year my renewal came in at $1453. I had one claim back in '08 & the home is just over 10 years old.
So now to the story, I was shopping around and speaking to an agent. She said to me that our rates would not be this high right now if insurers were charging the correct amount all along. She further stated that our insurance rates in Florida have been much too low for too long. OK, so here's my issue with these statements. Insurers have actuaries work for them. These mathematicians create formulas that the insurers use in rating risk. Risk is the underlying factor in insurance. Things are cyclical - whether we are talking about the weather, life, real estate - it really all is very cyclical. So, getting back to insurers, do you think that they are not going to charge us enough to cover their risk? Seriously, now. This is what this woman was telling me.
The insurers ran this garbage back after Andrew in '92 and again after all of the '04 hurricanes. Granted, '04 was an anomaly, but how many years did we go without any severe storms that cost the insurance companies. If you look at their books, you will note that they are still making a profit.
Anyway, enough of my ranting! I just really ticks me off when people think we are stupid. It's fine to get your point across, but be realistic. Don't make it out that we are stupid! That is just such a lack of respect & that is something that I will not deal with. We all deserve respect!
Thanks again for listening to my meanderings.
Until next time - Marc It Sold!
Tuesday, August 8, 2006
Insurance
As I alluded to in the previous post, I wanted to discuss the topic of Insurance and specifically Condo Association Insurance. Again, as I've stated while writing the Market Trends post, this also has been a topic in the news that is of great concern to many of us.
Insurance in itself has gotten out of control in the State of Florida. I won't deny that I am not sure as to the rest of the nation, but in Florida we are probably pushing toward an epidemic of sorts.
If you are not aware of what is occurring, than let me recap for a moment. Firstly, the cost of most housing insurance has skyrocketed in the State of Florida. I started becoming more aware of this situation while helping a client who was relocating to the western side of the State much earlier this year. Now, granted, we expected the insurance to be higher because there was a pool involved, but when quoted that the least expensive would cost $2300/year, we were totally astonished. Couldn't believe that we were getting rates upwards of $2800.
Anyway, we've most likely heard about people being dropped by their insurer, therefore, not being renewed and having to search out other options. In Florida, we have a state insurance fund of last resort, Citizens Insurance. Unfortunately, we've heard the debacle that they are in. Oh by the way, we are all paying for that with surcharges on our policies, whether you are with Citizens or another carrier.
Citizens actually has to have higher rates so that they are not in direct competition with the other insurers that wish to do business in Florida and write policies. Citizen has also become the largest insurer in the State of Florida due to others pulling out. This has put all of us in a precarious position.
OK, enough of that doom & gloom. Now to another aspect of the insurance industry that is also quite scary and will affect so many lives & unfortunately be devasting to quite a few. When you purchase a condo, you should get homeowners insurance. Now the condo association also has a master policy covering the association, buildings, common grounds, etc.
Here's the first part of the sad part. There are fewer & fewer insurers that are wishing to provide this for these associations. Many are just dropping these assocations, while many others are in some instances quadrupling the association rates. I know of one community where I've been told that because of the rate increase they are going to have to raise the monthly maintenance fees that the condo owners pay at least $100. In the Orlando Sentinel, it was mentioned last week, that Lake Villas in Altamonte Springs off of Maitland Ave. has their rates increasing from approximately $33K/year to $197K. This in turn is requiring them to increase the monthly maintenance fee by $200/month.
Can you believe that? Do you understand how this will effect the owners there, many probably on fixed incomes. This will force people from their homes into uncertainty. This for many is like an additional mortgage payment.
Unbelievable, but what really gets me are the insurance companies. All of a sudden we are hearing of their supposed wows. Bunk!! How dare they! Do they give us breaks when they are making lots of money? I don't think so! But, we surely do hear them complain when they have to pay out large sums for the natural catastrophes that we've experienced in the last couple of years.
But & this is what really gets me, they have actuaries. An actuary's job is that of a statistician to compute risks & therefore premiums. So, they had a few years where they had to pay out. How about all of those years in which they didn't have to pay out so much? Again, did they give us a refund? Anyway, we all know that the weather is cyclical. We've gone through periods of this before. This is not something new. But the insurers are asking for increases & getting them, royally.
Where does this put us all? Unfortunately, like I stated at the outset, insurance in the State of the Florida is heading toward epidemic proportions. The state needs to do something and quickly. That means NOW!! Do you think they are listening?
Until next time...Marc It Sold!
Insurance in itself has gotten out of control in the State of Florida. I won't deny that I am not sure as to the rest of the nation, but in Florida we are probably pushing toward an epidemic of sorts.
If you are not aware of what is occurring, than let me recap for a moment. Firstly, the cost of most housing insurance has skyrocketed in the State of Florida. I started becoming more aware of this situation while helping a client who was relocating to the western side of the State much earlier this year. Now, granted, we expected the insurance to be higher because there was a pool involved, but when quoted that the least expensive would cost $2300/year, we were totally astonished. Couldn't believe that we were getting rates upwards of $2800.
Anyway, we've most likely heard about people being dropped by their insurer, therefore, not being renewed and having to search out other options. In Florida, we have a state insurance fund of last resort, Citizens Insurance. Unfortunately, we've heard the debacle that they are in. Oh by the way, we are all paying for that with surcharges on our policies, whether you are with Citizens or another carrier.
Citizens actually has to have higher rates so that they are not in direct competition with the other insurers that wish to do business in Florida and write policies. Citizen has also become the largest insurer in the State of Florida due to others pulling out. This has put all of us in a precarious position.
OK, enough of that doom & gloom. Now to another aspect of the insurance industry that is also quite scary and will affect so many lives & unfortunately be devasting to quite a few. When you purchase a condo, you should get homeowners insurance. Now the condo association also has a master policy covering the association, buildings, common grounds, etc.
Here's the first part of the sad part. There are fewer & fewer insurers that are wishing to provide this for these associations. Many are just dropping these assocations, while many others are in some instances quadrupling the association rates. I know of one community where I've been told that because of the rate increase they are going to have to raise the monthly maintenance fees that the condo owners pay at least $100. In the Orlando Sentinel, it was mentioned last week, that Lake Villas in Altamonte Springs off of Maitland Ave. has their rates increasing from approximately $33K/year to $197K. This in turn is requiring them to increase the monthly maintenance fee by $200/month.
Can you believe that? Do you understand how this will effect the owners there, many probably on fixed incomes. This will force people from their homes into uncertainty. This for many is like an additional mortgage payment.
Unbelievable, but what really gets me are the insurance companies. All of a sudden we are hearing of their supposed wows. Bunk!! How dare they! Do they give us breaks when they are making lots of money? I don't think so! But, we surely do hear them complain when they have to pay out large sums for the natural catastrophes that we've experienced in the last couple of years.
But & this is what really gets me, they have actuaries. An actuary's job is that of a statistician to compute risks & therefore premiums. So, they had a few years where they had to pay out. How about all of those years in which they didn't have to pay out so much? Again, did they give us a refund? Anyway, we all know that the weather is cyclical. We've gone through periods of this before. This is not something new. But the insurers are asking for increases & getting them, royally.
Where does this put us all? Unfortunately, like I stated at the outset, insurance in the State of the Florida is heading toward epidemic proportions. The state needs to do something and quickly. That means NOW!! Do you think they are listening?
Until next time...Marc It Sold!
Thursday, May 18, 2006
Flood Insurance - You don't think you need it - Do You?!?" Original Post on May 18, 2006
A recent article that I read, states that flooding is the #1 natural disaster in the United States. And more importantly, you don't have to live near water to be affected. "Regional weather systems, hurricanes and tropical storms, runoff changes from new construction and damage caused by wildfires can precipitate flooding in every region of the country." Accordingly, 20-25% of all claims come from areas with a low to moderate risk of flooding. You can only gather that the majority of these victims don't have flood insurance.
There is a really good site to check out by FEMA - http://www.floodsmart.gov/.
Flood insurance is relatively cheap and in low to moderate risk areas, homeowners can protect their property with lower-cost PRP's (Preferred Risk Policies).
This is not just something for homeowners, but also business owners & renters. Who of us can really afford to become the victim of a flood?
Until next time - Marc It Sold!
There is a really good site to check out by FEMA - http://www.floodsmart.gov/.
Flood insurance is relatively cheap and in low to moderate risk areas, homeowners can protect their property with lower-cost PRP's (Preferred Risk Policies).
This is not just something for homeowners, but also business owners & renters. Who of us can really afford to become the victim of a flood?
Until next time - Marc It Sold!
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