There are about 114,716,356 households in the United States. These households pay about $70 billion in premiums on a yearly basis. About 7% of these homeowners make claims in any given year and these claims usually average to about a value of $8,311. About 2.3% of all claims result from wind and hail damage and 1.52 % results from water damage. As South Florida homeowner’s insurance attorneys we find water damage to be the most common cause of loss. There are probably about 70,000 to 80,000 Florida homeowner insurance claims per year. This would mean that on a regular year insurance companies have a risk amounting to $582,000,000. Of course, this number is multiplied tremendously if a wind event like a Hurricane occurs.
It is estimated that Citizens Insurance Company bears a burden of risk amounting to $500 billion. Of course, this would require the absolute destruction of almost every home in Florida. We would hope this is a very unlikely circumstance. For the most, catastrophic hurricane seasons cause damages amounting between $20 and $30 billion. It is estimated that Citizens has a reserve of amounting to some $11.3 billion. This reserve has been growing (thankfully) due to the lack of any major events. Citizens probably takes in about $1,513,200,000 in yearly homeowner’s insurance premiums. Indeed, much of these premiums are used toward a hefty infrastructure. Thus, there may be basis for the argument that Citizens may not be able to deal with a truly catastrophic event without depleting reserves.
Unfortunately, these circumstances lead to high premiums and constant struggle with homeowner’s insurers. As Miami Homeowner’s insurance lawyers we understand this too well. The tendency of insurance companies is to deny, delay, or undervalue claims. These strategies may indeed be the result of some form of overexposure. Is there a solution to this problem? That is, can there be healthy insurance structures that can respond rapidly and efficiently to insurer needs and yet remain highly profitable. We think there may be hybrid mechanisms that could be used to minimize risk to an insurer and maximize benefits to a policy holder.
One example would policies that act as a sort of emergency savings fund. For example, what is part of the premium went toward a saving account and the other toward administrative fees and the premium. The average premium in Florida is about $1,164 per year. Thus, $500 could go toward a saving account and the remainder toward fees and premium. Let’s assume a homeowner suffers a water loss amounting to $5,000. This homeowner has not suffered any losses in the last 10 years. He may elect to withdraw the $5,000 and waive the claims process. Thus, the homeowner can repair his home quickly and without hassle. If there is an excess, then the insurer would have to go through the regular claims process. However, given that the average claim amounts to $8,000 this may be unlikely.
Miami-Dade homeowner’s water damage attorneys are here to assist you 24/7. We can be reached at 1.888.413.8353.