Some states are more likely to be harmed by fires, hurricanes, tornadoes, snow, and other natural occurring “acts of God.” Due to the pressure many home owners face with constant home insurance increases many families are being forced out of their homes.
A suggested fix would be a federal level “like flood” to allow a median price per square foot insurance cost. This would slightly raise home owners insurance to some people nation wide but also lower the cost to many whom now insurance is more than there actual mortgage. Allow the home owner to choose either the states insurance, the federal level insurance, or a private company. With the help of the federal government placing a level of home owners insurance nationally this would allow prices to be the same across the nation vs individual areas being punished for living within a zone.
The proposal would be for a 1% of total cost per year of the total policy.
Example: $100,000 home owners insurance would be $1000 per year nationally.
$200,000 home owners insurance would be $2000 per year nationally.
2nd: the individual can choose the amount in which they want to insure. Companies are now forcing home owners to insure for total replacement cost vs what is owed on the loan for the mortgage company.
Current example: a person owes $125,000 left on the mortgage. The home per the insurance company says the property is worth $300,000. The insurance company is forcing the home owner to purchase a $300,000 policy instead of the pay off. Mortgage company terms only state insurance must cover the pay off yet insurance companies are forcing the owners to pay the higher premiums for the higher coverage. None of the companies offer a selection of coverage only for pay off amounts.
Caps on increases: home insurance companies have recently taken advantage of already poorly effected areas by increasing insurance over 50% in a single year. This should fall under price gouging but unfortunately no one has brought this forward for national relief.
No company should be able to increase a premium so drastically as to inadvertently force a person to sale their home. For this reason caps of increase would be placed at 10% per year for a maximum of 10 years under the same policy.
Suggested areas of increase can be discussed.
Another option would be to purchase a 1 time insurance that follows the loan amount and time. Similar to mortgage insurance that is designed to pay off a loan when the owner dies. This insurance can be a monthly payment that is purchased at the time of the loan for the amount of the loan “payoff.”
Example: one purchases a home for $300,000. When you close the loan an insurance would be purchase for national disasters. The mortgage is for 30 years, so this insurance is for 30 years. In 10 years of paying off on the mortgage you now have $250,000 left on the loan. A disaster hits and destroys your home. The insurance would pay off the left over loan of $250,000. This will only be activated at a time when a home is unlivable and not viable to have repairs done and completed within a certain time frame, let’s say 6 months.
Many changes can be done to the insurance industry to make the cost of home ownership more viable. This must be worked on as this cost is taking thousands away from families per year with no increase of pay leaving these families in hardship.
1 Like
Being in Florida this is completely true and seeing how hurricanes impact cost of housing and insurance this must be addressed. Also if the rental market drops and there are lower priced units available it should not be so difficult to switch units or just have everyone’s rent adjusted fairly when a lease is renewed.