Miami-Dade Raises the Roof to Cut Roof Insurance Coverage

Miami Dade roof claims

Homeowners in Florida with roofs 10 years old or more could see their replacement coverage diminished by bills now advancing in Tallahassee that would substantially change the state’s property insurance rules.

In a rare move, all 13 Miami-Dade commissioners added their names to a resolution by Joe Martinez opposing the legislation, SB 76 and HB 305, which were filed respectively by Sen. Jim Boyd of Bradenton and Rep. Bob Rommel of Naples.

State law now requires insurers to offer an adjustment to residential properties on the basis of replacement cost. The Florida Office of Insurance Regulation can approve policy forms that adjust roof losses based on actual cash value due to depreciation, among other reasons, but insurers must still offer a replacement cost adjustment on the roof before issuing the policy.

Under new rules proposed in the bills, if a homeowner’s roof is at least 10 years old and is destroyed by a hurricane, an insurer could opt to pay only what the roof was worth at the time rather than the full replacement cost.

Lifespans of Florida roofs vary widely, according to the International Association of Certified Home Inspectors.
Roofs made of aluminum coating last only two to six years. Those made of asphalt can stave off the elements for 15 to 20 years without deteriorating. Wood lasts about 25 years. Copper, slate and clay perform well for 50 to 80-plus years.

“Forget about the fact that you’ve been paying your full insurance to have a replacement roof and they’re not going to give you a refund – they just stop doing it; they pocket that money – but the majority of roofs last 25 to 30 years,” Mr. Martinez told Miami Today. “Any roof will cost you $35,000 or more. Insurance may wind up paying you $7,000 to $10,000. What are seniors who live on a fixed income going to do? What about couples who just overextended themselves to buy their first home? They’ll either have to refinance, take out a second loan or live with a blue tarp or leaks, because that money’s not going to be there.”

Of some 60,000 dwellings in his district, Mr. Martinez said about 48,000 have roofs older than 10 years, according to information from the county property appraiser. Assuming that ratio extends countywide, 80% of Miami-Dade’s 757,322 residential properties – 605,858 homes – wouldn’t get full roof replacement coverage if either of the two bills pass.

“The biggest expense when we get hit with a hurricane is the roof. That’s where insurance companies pay the most,” he said. “I can see why they don’t want to do it. What I can’t see is why anyone who’s elected to represent people in Florida would do this to benefit an industry and hurt your residents.”

It’s not that simple, said Sen. Boyd, who is also the CEO of Boyd Insurance and Investment, which offers both business and personal insurance, including homeowner and rent coverage.

The reason he brought forth the bill, he told Miami Today, is that Florida’s property insurance market is facing a “crisis” in which “nearly every domestic carrier … has lost money, and rates for the consumer – the policyholders, our constituents – have continued to rise.”

In many cases, homeowners are seeing increases of up to 60% in their policies, he said, adding that his own renewal policy went up by 40% in March.

The development is relatively new. In 2016, just six of 64 rate filings with the Florida Office of Insurance Regulation went up by 10% or more, according to a graph the agency showed state lawmakers in January.
Last year, 55 of 105 rate filings were for double-digit hikes, agency personnel said.

A big reason for that, Sen. Boyd said, is “frivolous and unprecedented lawsuits” by “rogue attorneys and roofing contractors” seeking full roof replacements when only a small portion of the roof is damaged.

“What our bill gets at is trying to put some expectancy there in terms of the life of the roof and the availability for insurance to pay for roof damage,” he said.

It also aims to end multipliers on lawyer fees attached to claims, which he said have become exorbitant. Of $15 billion insurance companies paid out to Floridians since 2013, he said, 71% went to attorneys and fees while just 8% went to claimants.

“Something’s wrong with that picture,” he said.

He claims Florida has grown inhospitable to insurance companies that would otherwise come here, thus reducing competition and forcing prices up. By addressing high legal fees and reforming certain coverage policies, he said, his bill will make Florida more attractive to carriers.

While what’s going on is in no way the fault of consumers, he said, there are misconceptions of what role insurance companies are supposed to have.

“Many have been led to believe and see evidence that insurance has become a little bit more of a warranty policy than a policy [for when] you have a catastrophe,” he said. “If you have a 20-year roof, it’s year 19 and you have 10% of your roof damaged, is it really fair to expect 100% of your roof to be replaced? In essence, that’s what’s happening.”

Mr. Rommel did not respond to multiple requests for comment.

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