Well, I met Bill at our local grocery store, and all he had on his mind were the poor folks on the Western coast of Florida after hurricane Ian came through. We both offered our public condolences to those affected by the storm. However, he had some opinions to share, in particular, insurance-related ones. I’ve enclosed the gist of our conversation while we stood in the bread aisle, perhaps blocking the aisle from other customers just interested in grabbing a few items for dinner.
Bill began by saying, “If I resided in Florida, I don’t think I’m obligated to get home insurance.
TO THE BEST OF MY KNOWLEDGE, I SAID, “I BELIEVE HOME INSURANCE IS A LEGAL REQUIREMENT IN FLORIDA.”
Bill appeared to ignore the part about a legal requirement and then said, “At least if Florida residents have homeowner’s insurance, especially after Ian, they are also covered for any water damage.”
I HAD TO RESPOND AGAIN, SAYING, “THAT’S NOT EXACTLY TRUE. IF THE STORM TEARS OFF PART OR YOUR ENTIRE ROOF AND YOU GET WATER IN YOUR HOUSE, THAT’S A PROPERTY CLAIM FROM YOUR HOMEOWNER’S POLICY. IF THE WATER RISES DUE TO A STORM AND CREATES A STORM SURGE, AND COMES FROM THE GROUND UP, THAT’S A FLOOD CLAIM. IN THIS SCENARIO, FLOOD INSURANCE WOULD BE NEEDED TO ADDRESS THE STORM SURGE OF WATER. JUST TO BE CLEAR, SOME RESIDENTS IN THE ORLANDO AREA EXPERIENCED FLOODING DUE TO EXCESS RAIN THAT CAME FROM THE GROUND UP. HOW DO YOU ANTICIPATE THAT IF YOU DON'T LIVE IN A FLOOD PLAIN?”
Bill then said something that even surprised me, “If I ever move there, I would gamble and not get flood insurance, even if I’m on the coast.”
MY RESPONSE WAS, “YOU REALIZE NOT HAVING FLOOD INSURANCE AND LIVING NEAR THE COAST MEANS THAT YOU COULD BE IMPACTED BY A HURRICANE TO BE DESTROYED FINANCIALLY. AND THIS COULD OCCUR MERELY BY THE STORM SURGE, REGARDLESS OF HOW MUCH RAIN FELL. WOULD YOU HAVE THE FUNDS TO REBUILD IF YOU DON’T HAVE FLOOD INSURANCE?”
I CONTINUED, “BESIDE, SOME MORTGAGE LENDERS REQUIRE HOMEOWNERS TO GET FLOOD INSURANCE, ESPECIALLY IN A DESIGNATED FLOOD PLAIN.”
I don’t think he caught that requirement, he continued, “Homeowners don’t pay any more for insurance than the national average, so I don’t know what people are freaking out about.”
THIS IS PATENTLY FALSE SO I HAD TO RESPOND, SAYING, “WRONG, HOMEOWNERS IN FLORIDA PAY ALMOST TRIPLE THE NATIONAL AVERAGE FOR INSURANCE ($4,231 a year per policy), COMPARED TO THE U.S. AVERAGE OF $1,544. I BELIEVE THIS IS FROM THE INSURANCE INSTITUTE. HONESTLY, FLORIDA IS MORE EXPENSIVE THAN YOU REALIZE.”
Bill claims all areas of the country experience catastrophic events by saying, “Florida sometimes has hurricanes, but California has wildfires and potential earthquakes, and Colorado has blizzards.”
MY RESPONSE WAS, “COLORADO MAY HAVE BLIZZARDS, BUT I DON’T RECALL A BLIZZARD LEAVING THE KIND OF DEVASTATION DONE BY A HURRICANE.”
Next, it appeared the conversation leaned toward economics. Bill said, “I heard it was cheap to live in Florida, where you don’t have a state income tax.”
MY RESPONSE WAS, “NO INCOME TAXES, SO WHERE DOES THAT MONEY COME FROM TO PAY FOR SCHOOLS, LOCAL AND STATE GOVERNMENT, AND ALL THE OTHER PUBLIC SERVICES? TAXES. GROCERIES AND PRODUCE IN PARTICULAR ARE MORE EXPENSIVE THAN IN THE MIDWEST. BESIDES, THEY DO HAVE A SALES TAX AND I BELIEVE A 12.5% HOTEL TAX. I HEARD THEIR SALES TAX IS 6% PLUS A COUNTY TAX (FROM 0% TO 2.5%). LUCKILY, THERE’S NOT A CITY TAX. YOU HAVE TO REALIZE IT’S MISLEADING TO JUST SAY “NO STATE INCOME TAX” WITHOUT PUTTING IT INTO CONTEXT. EXPERIENCE HAS TAUGHT ME THAT FLORIDA IS NOT AS CHEAP OR INEXPENSIVE AS IT PORTENDS TO BE.”
Bill continued, “Well, Florida is doing everything it can to address this issue.”
HERE’S WHAT I THINK, “THERE ARE AT LEAST TWO ISSUES THE STATE COULD DO TO ADDRESS THIS LIABILITY ISSUE. FOR SOME TIME, ROOF REPLACEMENT SCHEMES OCCUR WHERE UNSCRUPULOUS CONTRACTORS GO DOOR TO DOOR SCANNING HOMEOWNERS INTO THINKING THEIR ROOF NEEDS REPLACING WHEN IT DOESN’T. THAT UNNECESSARY EXPENSE WOULD BE POOLED SO ALL INSURERS PAY. SECOND, THE INSURANCE INDUSTRY ALSO POINTS TO FLORIDA’S “TORT” LAWS, WHICH ENCOURAGE MORE LAWSUITS AGAINST INSURERS THAN IN OTHER STATES. OVER THE PAST THREE YEARS, THEY’VE RECEIVED OVER 100,000 LAWSUITS RELATED TO PROPERTY CLAIM ISSUES. ALL THAT LITIGATION DRIVES UP THE COST OF PROPERTY INSURANCE. IN SOME SITUATIONS, DUE TO EXCESS LITIGATION, SOME INSURERS HAVE DECIDED IT’S NOT PROFITABLE TO CONTINUE TO INSURE IN FLORIDA. DO YOU THINK REFORM IS NECESSARY TODAY IN FLORIDA?”
Bill appeared to have not heard me as he said, “I don’t know if it’s yet a crisis in Florida?”
MY REPLY WAS, “OF COURSE, INSURANCE COMPANIES ARE PROFIT-MAKING ENTITIES, AND SO WHEN THE PROFIT IS GONE, THEY GO TOO. HOW WILL THEY MAKE INSURANCE MORE AFFORDABLE, ESPECIALLY FOR LOW TO MODERATE-INCOME FOLKS? FIRST, THE STATE MASSIVELY OVERREGULATES INSURANCE COMPANIES MEANS THAT MOST PEOPLE CAN SUE THEIR INSURER FOR ANY SITUATION. IF THE INSURER EVENTUALLY LEAVES, THE STATE WILL THEN SUBSIDIZE TO INSURE THOSE PROPERTIES THAT ARE LESS DESIRABLE TO ENSURE.”
Toward the end of our conversation, my neighbor said, “At least people have options when it comes to insurance.”
MY RESPONSE “DEPENDS ON HOW YOU DEFINE ‘OPTIONS.’ DUE TO CLIMATE CHANGE, CURRENT INSURANCE RATES GREATLY UNDERESTIMATE THE THREAT. THIS MIGHT NOT BE SUSTAINABLE AS TIME MOVES ON. FOR EXAMPLE, IAN IS ESTIMATED TO COST 30 TO 60 BILLION DOLLARS. HOW MANY MORE OF THESE EVENTS CAN THE STATE HANDLE?”
AFTER SAYING THIS, I KNEW BILL WOULD WANT TO ARGUE ABOUT CLIMATE CHANGE, SO I SIMPLY EXCUSED MYSELF TO GO TO THE PRODUCE AREA TO BUY SOME FRUIT AND VEGETABLES.