Lakewood Ranch, FL Blog

So, it was that time of the year again...time to renew my homeowners insurance policy.  I'll admit that normally I don't give a great deal of thought to such things but, this year, the price increase of about 30% got my attention.  I called my agent and suggested it was time to shop around for a new insurer.  She came up with one that I had never heard of but the price was right so I said OK.  However, as I read the material, I discovered that they wouldn't cover a property if there was a breed of dog found on the "bad dog" list.  Just my luck, my sheepish German Shepherd (who fears her own shadow) disqualified me from the new company so, again, my agent searched around and found a new company that was, apparently, less concerned with my dog and so, I signed.  Even better, the price was lower than the first replacement company!   What could be better?

A few days later, the Sarasota Herald Tribune reported that Florida has a number of smallish insurance companies which technically meet the legal requirements the state demands but, in the case of a major disaster (like, I dunno, a hurricane?), would be incapable of covering all of their claims!  Naturally, they had a lineup of the 6 or 8 worst of the worst companies and, wouldn't you know it, there was my bright, shiny, new insurance company listed among the weaklings.  Although they are A-rated by Demotech, a company that specializes in that sort of thing, the researchers at the newspaper were able to determine that these companies would not be able to handle a widespread disaster. 

Sound familiar?  Doesn't that sound just like the mess we've been going through in this country for the past few years because the people responsible for making sure that the banking system was sound were, in fact, asleep at the wheel?  Are we about to have yet another fianancial shoe drop here in Florida?  It sure sounds possible.

To her credit, I read that Alex Sink, Florida's Chief Financial Officer, has called upon the State Insurance Commish Kevin McCarty to get to the bottom of this potentially horrific situation before the 2 million families covered by these companies find themselves at a complete loss.  Another positive sign...the Florida Senate Insurance Committee is supporting legislation to raise the minimum capital contribution requirement for Florida insurers from $4 million to $15 million.  That will help assure that insurers are stronger and better equipped to handle major claims but I have a feeling much more will be needed before we are really safe.  Remember, even if you are not insured by one of these weak companies, you are still facing major losses to your net worth if your property is surrounded by homes that won't be fixed following a hurricane because your neighbor's insurance company can't cover their insured's losses.

These days, it almost feels like an archaic term: "home equity loan".  With the media focusing so much attention on homeowners who are "underwater", the idea of getting a home equity loan (or finding a lender who will offer a home equity loan for that matter) seems like an unlikely proposition.  However, there are many property owners who don't need to sell anytime soon and who have equity in their homes now.  If that's you and you have a need for the money, you might want to talk with a lender.

I just read an article that said lenders are expected to make about $36 billion in new home equity loans over the next year, according to Moody’s Economy.com. That’s actually more than the $34 billion in home equity loans made in 2008.  The article goes on to say that lenders prefer to see the money go toward projects that will enhance the value of the property such as updating a bathroom or kitchen, or replace a roof...that sort of thing.