Protect Yourself

Most Internet homeowners insurance companies operate fairly and in compliance with Florida Statutes. They don’t use hidden fees or attempt to lowball premium quotes or reduce your coverage below what’s acceptable or known to you. However, the first line of defense against these kinds of unfair trade practices is, when you suspect such violations, to report them to the appropriate regulator under the tab "Supplemental Information."

For now, the following warnings should help you make a fully informed decision and to avoid the pitfalls of buying from an Internet homeowners company.

• Always make sure you are talking with an individual who is duly licensed in Florida. Ask if they are licensed. If they say, “yes,” ask for their license number. If they say “no,” ask to speak with someone who is licensed. The law requires everyone who sells insurance in Florida to be licensed. There are no exceptions. Get their full name and report any violations to the DFS Consumer Helpline at 877-MY-FL-CFO.

• Always make certain you receive every discount you are entitled to. However, never accept discounts to which you are not entitled, even if the company or telephone operator says its okay or encourages you to do so. Both the company and you may be guilty of insurance fraud, but…YOU may have to pay additional premium during the policy term or at renewal and be unable at that time to get coverage from your previous carrier. Online companies often record your phone comments and falsifying information on an insurance application is coming under closer scrutiny by state regulators. Besides, if the company is willing to cheat in order to steal your business, what do you think it will do when it comes time to pay your claim?

• NEVER directly cancel your existing coverage in order to go with an Internet homeowners insurance company without first contacting your existing provider, especially your agent. You may encounter “short rate” penalties for midterm cancellation as well as the possibility that you will not be able to secure new coverage during hurricane season after cancelling.

• NEVER assume it is okay to buy less than the full replacement cost of your home. Remember, replacement cost (the cost to rebuild) and sales price or market value are not the same thing. IMPORTANT: Our experience is that all policies carry steep penalties for failing to maintain the required amount of replacement coverage. These penalties apply to even “partial” losses beneath your selected coverage limit, so that even a small claim payment could be reduced if you have not carried the proper amount of coverage on your full dwelling. Finally, failure to keep full replacement cost coverage may place you in violation of your mortgage. Remember, only a “licensed” insurance agent can help you make the right decision as to amounts, costs, and potential penalties. Never deal with someone who cannot prove they are duly licensed.

• ALWAYS be skeptical of Internet companies that offer or promise you unverified or inappropriate mitigation discounts. This is illegal. Report any violations to the appropriate authority under  "Supplemental Information" tab.

• ALWAYS be skeptical of the promise of huge savings like: “up to 70 percent” or “half of what you’re currently paying.” These “too good to be true” promises are probably achievable only by eliminating coverage or by the misapplication of discounts or both. Again, if the company is willing to cheat to sell the policy, what will it do when you file a claim?

• NEVER buy from a company that says it saves money by not using agents. Not using agents to sell insurance is against the law and, based on regulatory filings and premium comparisons, it can even cost you more.

• ALWAYS check for hidden fees on the face of your policy and by talking to a licensed agent. According to filings with the OIR, the same online insurer spending 15.5 percent on advertising (part of which accuses others of charging “hidden fees”), also spends another 15 percent of your premium to process your policy for a total of more than 30 percent. This money, plus another $25 fee, is paid to what is called a Managing General Agency or MGA, which in this case, according to OIR filings, is wholly-owned by the online insurer.
  
  Agents for traditional carriers can provide information on the various fees and assessments on your policies, including MGA fees of the carriers they represent. When dealing with an online insurance company, the important thing is that you ask the right questions up front to fully understand exactly how your premium dollar is being allocated.

• NEVER buy insurance from a company that advertises it is covered by the Florida Insurance Guaranty Association. Not only is every “admitted” company also covered by the Guaranty Fund, but…such advertising is strictly prohibited by law. Besides, the Guaranty Association is for insolvencies!
  
  GOOD LUCK!!