From the St. Petersburg Times:
For storm upgrade, only small savings
By TOM ZUCCO, Times Staff Writer
Published August 16, 2006
Ted Gembicki did exactly what state
officials and the insurance industry want most Floridians do. He bought aluminum
storm shutters and had the garage door reinforced on his modest Spring Hill home
last month at a cost of $5,225.
Armed with photos of the work, he
asked his State Farm agent for a break on his homeowner's premium. For his
efforts, his agent told him, he would get a 5 or 10 percent discount. The extra
$100 wasn't much, said Gembicki, 62, but it was something.
The check he got last week: $16.11.
"Maybe I'll buy a pizza," he said.
Gembicki's case illustrates what
could be a serious flaw in the state's new mitigation program, which took effect
Tuesday, to encourage residents to harden their homes against hurricanes.
The law, which offers matching
state funds of as much as $5,000 for improvements that fortify a home, also
requires insurance companies to offer incentives for such fixes. But the law
doesn't include a specific financial obligation on insurers to reduce premiums.
According to the statute, all the
companies are required to do is offer homeowners "discounts, credits or other
rate differentials".
Sometimes, that can amount to very
little.
Insurance companies offer discounts
for those who harden their homes in a wide range - from up to 39 percent for
State Farm and 33 percent for Citizens, to just 3 percent for Nationwide.
But the discounts fluctuate
dramatically depending on the age of the home, its construction, location and
insured value.
At a Cabinet meeting Tuesday in
Tallahassee, Insurance Commissioner Kevin McCarty said the percentage of the
discount will be based on just the wind portion of a policy, not the total
premium.
But again, that can vary. In
Florida, the wind portion of a premium represents between 15 and 70 percent of
the total cost, depending on location.
Gov. Jeb Bush acknowledged Tuesday
the amount of a discount is a key part of the highly touted mitigation program.
"If the discount is 5 percent, I'm
not interested," Bush said. "If it's 30 percent, now you're talking."
Officials from State Farm Floridian
and Allstate Floridian expressed support for the program at Tuesday's Cabinet
meeting.
"It's in everyone's best interest
to do it," said Joe Formusa, a State Farm vice president who also was appointed
recently to the governor's insurance technical advisory committee.
But no one could say how much of a
discount policyholders will receive.
Tom Gallagher, the state's chief
financial officer who is running for governor, said each homeowner who receives
an inspection report will also get a breakdown of how much will be saved on
their insurance premium. That figure, Gallagher said, will be based on how much
work is done.
But that leads to yet another
potential problem: too many homeowners and not enough time or money. The state
hopes to have 12,000 homes inspected in the next 12 weeks, and another 50,000
inspected next year.
But there are roughly 4.2-million
homesteaded properties in Florida, and by noon of the program's first day in
business, the state had received more than 2,000 applications.
As part of legislation passed in
May, the state set aside about $250-million to fund the matching grants program
over a three-year period. Bush, who leaves office in January, said state
statutes should be changed to allow the program to continue beyond 2008.
While it remains to be seen how
much the state will have to spend on matching grants, some homeowners say they
already know not to expect much from their insurance company.
Roberta and Fred Hosken spent
nearly $300,000 earlier this year to hurricane-proof their home near Largo,
which has an estimated value of more than $2-million, according to the Pinellas
County property appraiser's Web site.
Looking to save on their nearly
$12,000-a-year property insurance bill, they hand-delivered the receipts to
their Nationwide agent.
The discount they got on their
$300,000 improvement: $400.
"We asked them what more we
could've done," Roberta Hosken said. "It just didn't matter."
But that wasn't the worst cut.
The couple got a letter two weeks
ago telling them that as of Nov. 10, Nationwide was dropping their homeowners
policy.
"And they asked us," Hosken said
with a chuckle, "to please consider them for our car insurance."
Tom Zucco can be reached at
zucco@sptimes.com or 727 893-8247.
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