UNDERSTANDING WIND MITIGATION

The Florida Office of Insurance Regulation has mandated that Florida homeowners are entitled to certain discounts on the wind portion of their property insurance policy. In order to receive the discounts, most homes must have the home inspected by a qualified inspector who will prepare a report detailing which, if any, credits are in place. The current form is the OIR-B1-1802 (Rev. 01/12) as adopted by Rule 690- 170.0155. The report is valid for five years.

The advantage to the homeowner who may have qualifying credits is a savings on the wind portion of their premium. The savings are dependent upon the existence of qualifying credits such as newer roof, hurricane clips or straps, shutter protection, having a HIP roof and nailing. The more you have, the more you save.

The advantage to the insurance company (you don’t think giving you discounts on your premium is an advantage to the carrier do you?) is the ability to document your roof so they may rate it in accordance to their risk guidelines. In the grand scheme, they don’t really care if you have hurricane clips…they want to know if the roof leaks or is subject to leakage. They really don’t care if your roof blows off as most homeowners carry at least a 2% deductible on the replacement cost valuation (assigned by the carrier). The replacement cost valuation is not what you paid for the home or what it actually costs to replace the home; it is the value the carrier determined it to be and what you pay the premium on. For example, let’s say your 2200sf home would cost $100/sf to build or $220,000. The home is most likely valued at $260,000 or about 20% higher (although I have seen much higher percentages). Therefore, your hurricane deductible is 2% of $260,000 or $5,200. Replacing a typical roof on this home is about $4,800 so the carrier would not pay anything for the roof replacement. Rarely, would a whole roof blow off without a total loss to the home and in that case you would be making a total loss claim anyway. You get the point though. The carrier does not expect to pay anything on a typical roof damage claim developed by high winds or driving rain. If you carry a $500 deductible, you will pay for the roof replacement in increased premiums whether you realize it or not.

In reality, will you benefit from a wind mitigation report? You may, provided the following conditions are not present:

Asphalt shingle roof over 18 years old

Flat roof over 10 years old

No documentation on roof replacement, i.e., building permits Beware of home inspectors promising “significant savings” or “guaranteed savings.” Guarantees do not exist and no inspector can predict how the underwriter will view this home in rating the premium or even the desire to offer insurance or insurance renewal. Carriers routinely change their portfolio in their best interest. They make decisions to remove risks based on location, age of home, credit scores, insurance scores, local crime statistics and a host of other factors in their decision matrix. You will never know why they make these decisions but you should understand if the carrier is denying credits or delaying decisions or demanding high premiums, they simply do not want this business and you may be better off shopping a new carrier.

Here are some rate comparisons pulled from the Florida Office of Insurance Regulation for 2013. You can check current postings at: www.floir.com/choices. Average rates are listed by carrier and county. These rates are for a Pre-2001 home valued at $150,000.

Clay County                     With Wind Mitigation            No Wind Mitigation

Lowest rate                         $ 406.                                                      $ 793.

Average rate                       $ 902.                                                      $1,412.

High rate                            $1,398.                                                     $2,031.

 St. Johns County

Lowest rate                         $ 484.                                                     $ 999.

Average rate                       $1,080.                                                   $1,589.

High rate                            $1,676.                                                    $2,179.

Duval County

Lowest rate                       $ 544.                                                      $1,133.

Average rate                     $ 983.                                                      $1,516.

High rate                          $1,421.                                                     $1,899.

What does a Wind Mitigation inspection cost? Many inspectors, who perform volume inspections or who are minimally qualified, will charge as little as $70.00 for any home while some inspectors may charge a minimum of $150.00 for the typical home and higher for certain high value or complex homes. The higher priced inspector will attempt to document building permits and in general provide a higher level of service than the low end, volume inspector. If you have all the necessary documentation, you should be fine with the lower price inspector but again, as in most things, you will typically get what you pay for. Assuming there are no roof related issues, generally even the higher priced inspector will be offset by the first year savings alone.

Sometimes, you do not have a choice in ordering a wind mitigation inspection. If the carrier suspects the roof is old, they may insist on the inspection as a condition of underwriting. Based upon your knowledge of the home/roof, you should then hire the best qualified inspector you can. Do not always take the recommendation of the agent as they are well known for recommending the cheapest inspectors around. I can’t explain this rationale but that is what they tend to do.

If you must order an inspection or feel you may be eligible for discounts by submitting a report, do a little homework. Call the local building department and ask them for a list of permits on the home. If the home has hurricane shutters, check them for any data tags and find out if they are listed on the Miami-Dade Product Approval List. Contact the supplier if necessary. Provide this information to the inspector to make sure the report is accurate. If the roof is newer but there is no permit available, try to get as much information as you can such as a receipt for the work to prove the date of installation. You should not expect a $70.00 inspector to do this work for you – they will simply document what they see.

If the building department does not have permits on file, you may consider ordering a BuildFax Complete Property History report from us. If you hire us for the inspection, we include this in our fee at no additional charge. If you wish to order the report without our service, you can order it for $29.95.

The majority of our clients do save money with a Wind Mitigation report and some have saved significantly. These reports are relatively inexpensive. Anytime you can possibly save $1,000 or more over five years for an investment of $150 today, is generally considered money well invested.

Please call us if you want an honest and straightforward inspector.