Tropical storm a reminder to protect our vital interests

June 27, 2012 

With widespread flooding and powerful winds, even tornadoes, Tropical Storm Debby serves as a reminder of three issues vital to the interests of all Floridians: storm preparation, property insurance and scam artists.

Though this storm did not reach hurricane strength, the slow-moving Debby demonstrated the strong impact that a lesser event can have with day upon day of torrential rains, high winds, downed trees and road and bridge closures.

And tragically, at least one life lost. A 32-year-old Highlands County mother suffered fatal injuries while shielding her infant child from one of Debby's tornadoes.

Prepare, prepare, prepare

For the tens of thousands who lost electrical power -- including some 15,000 in Manatee County alone at one point -- a can of Sterno for heating up that morning coffee can be a godsend. Residents who stocked emergency kits with this and other essentials will weather storms more comfortably and safely than others.

While hurricane preparation becomes an annual battle cry, still many Floridians scoff at the weather -- and find themselves rushing to shelters and safety at the last minute. Respect for Mother Nature's unforgiving power should be foremost in our minds.

Home insurance dilemma

While emergency management officials have yet to assess all the damage to beaches, homes and infrastructure, Gov. Rick Scott quickly declared a state of emergency. With all the water and wind damage to structures, insurance adjustors are already out on the streets inspecting damaged roofs and flooded vehicles and homes.

While auto and flood insurance will cover much of the damage, roofs ripped apart by winds are the province of property policies. And Florida's property insurance market remains rocky. The state-run insurer of last resort, Citizens Insurance Corp., holds $500 billion in risk exposure but only holds a $6 billion cash surplus and could cover storm damage amounting to $20 billion with its reinsurance policies and bond capacity making up the difference.

After six years without a hurricane making landfall in Florida, Citizens built its cash account to its highest level ever. But with a weekly influx of 1,000 new policies joining the 1.4 million homeowner policies on hand, Citizens could be driven into financial doom should a devastating hurricane flatten a large swath of the state. While the odds of that happening are slim, the threat still exists.

Citizens officials, Gov. Rick Scott and a number of lawmakers are clamoring for change.

Strict state-mandated price controls have driven private insurers from the market, artificially keeping premiums below an actuarially sound position.

The state wants to depopulation Citizens and re-energize private insurers by allowing the market to prevail instead of strict state regulation.

Next month, the eight-member Citizens board of directors is scheduled to vote on raising rates, subject to final approval by Florida's Office of Insurance Regulation.

Citizens holds some 27,000 policies in Manatee County. The average premium statewide is $2,250 annually, about 20 percent less than private market pricing. Should a catastrophic hurricane strike, Citizens has the power to charge assessments to everyone holding insurance, even a State Farm auto policy. In fact, the state's policyholders are still paying assessments on storm damage claims from about a decade ago.

The question before Citizens clients is whether to continue to gamble that the inevitable will not occur just yet, or begin paying higher premiums now to save for that stormy day.

For Floridians on the hook for assessments should a hurricane wipe out Citizens reserves, there's no debate.

The insurance market should be stabilized and fair. While reforming Citizens, the state must also ensure the private insurance market is a safe and sound investment, not a greater financial risk.

Working with contractors

While Tropical Storm Debby is only an annoyance to many, insurance companies will be writing checks for property damages. Homeowners should proceed with caution when hiring contractors to perform repairs.

The Better Business Bureau often warns residents about out-of-town contractors dubbed "storm chasers" who descend on a damaged location to solicit business.

Unscrupulous and unlicensed local contractors also try to take advantage of homeowners in a hurry to repair leaky roofs and other damage.

Be forewarned, though. Be wary of anyone promising work at cut-rate prices or soliciting door-to-door. Check a company's BBB rating and complaint history. Get several bids in writing.

Check contractors for licensing, liability insurance and worker bonding, the latter as protection against theft and additional damage. Ask for references.

Require a contract, but do not sign until consulting with your insurance company. Only pay a deposit of some 25 to 33 percent with final payment upon completion of the work. Never pay in cash.

Find more information at the West Florida BBB -- http://westflorida.bbb.org/ -- which serves the Manatee County market.

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