Fla. Homeowners Say Mitigation Discounts Don’t Help Much

David and Sandra Farkas figured a $9,500 investment in storm shutters would pay off at least a little in reduced insurance costs.

Last Thursday, they found out exactly how little: 3 percent, or $63 a year.

“It didn’t amount to a hill of beans,” said David Farkas, who has lived in his Plantation home for more than 30 years. “If you divide $63 into $9,520, I think I have to live in the house for another 151 years.”

They saved more, about $300, by combining their homeowners and auto policies.

Homeowners around the state, especially those in older homes, are voicing similar complaints after spending thousands on storm protection after state officials and insurance companies promised incentives for upgrades.

“It’s ridiculous,” said Joy Marks, vice president of the Coconuts Homeowners Association in Weston and advocate for insurance reform. “The insurance companies make these claims, but it’s just like security alarm systems. It’s maybe pennies.”

The state’s new hurricane mitigation program offers grants of up to $5,000 to fortify a home and requires insurers to offer discounts as incentives for the fixes. The law leaves it up to insurers to decide the size of the discount.

State officials said they don’t know how much the companies are offering.

“If the discount is 5 percent, I’m not interested,” Gov. Jeb Bush has said. “If it’s 30 percent, now you’re talking.”

Discounts vary by insurer. Homeowners in newer homes, built under more stringent regulations, are seeing more significant savings, said Bob Lotane, spokesman for the Florida Office of Insurance Regulation. Insurers are wary of older homes.

The state is now asking insurers to tell homeowners the actual dollar amount of a discount instead of giving percentages.

“We want to get this more user friendly,” Lotane said. “We want to get whatever discounts are out there, whether it’s large or small, doubled. And we’re going to be reviewing what these companies are giving to make sure they’re giving enough.”

Bush, who leaves office in January, said the program should be made permanent.

“I’m passionate about this mitigation program because I don’t see any other long-term solution to deal with the threat of multiple storms every season,” Bush said.

State and insurance officials said the discount debate is a distraction from the real point of shoring up against wind and water damage.

“People should put on shutters and harden their homes so they will still have a house to live in after a hurricane,” said William Stander, assistant vice president of the Property Casualty Insurers Association of America.

“You are helping yourself first,” Stander said. “We are all essentially self-insured for that first two to five percent of storm damage. You are forgetting the amount of money you’d be out if you didn’t add shutters.”

Andrew Braica of West Palm Beach took advantage of a USAA insurance offer for a hurricane inspection two years ago. The inspector liked his hurricane-hardened house, complete with shutters, and the company offered a $233 discount.

“I was extremely happy,” Braica said. “That was a substantial savings.”

David and Sandra Farkas said fear, not an insurance break, was the main reason they ordered shutters. But they said insurers need to be more clear about discounts. It took David Farkas about half an hour on the phone Thursday with Hartford Insurance to find out the exact percentage of his hurricane mitigation break.

Meanwhile on Thursday, Florida’s insurance commissioner, Kevin McCarty, rejected a request by Citizens Property Insurance Corp. to raise rates in the Florida Keys and instead ordered the state-created company to lower homeowners rates there.

Generally, state law requires Citizens to have rates higher than those offered by private companies in a given area, but regulators said there aren’t really any private companies willing to sell insurance in the Keys.

Citizens had sought an average increase of about 26 percent in Monroe County, but McCarty ordered the company to reduce rates by 32 percent. McCarty also ordered the company to lower its mobile home premiums by 15 percent instead of the 20 percent increase Citizens had sought.

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Associated Press writer David Royse in Tallahassee contributed to this report.