Because the Models, it can be Generalized Florida Mortgage This Spring

Not too many of us in Florida who want to talk about home insurance. Let's start by looking at how this life-threatening situation was created.

The catastrophe fund hurricane in Florida (Cat Fund) carries all the home insurance companies in Florida for a reinsurance premium - which is insurance for insurance companies. It is a simple mechanism that allows insurance companies to reimburse the Cat Fund, since the demands of a major event of Florida hurricanes exceed certain levels.

To cope with the rapidly rising costs of home insurance Florida Florida Legislature passed legislation in 2007 that increased the obligations of the Cat Fund an additional $ 12 billion over previous levels. This movement made the Cat Fund directly responsible for up to $ 28 billion in losses and led to modest reductions of Florida home insurance rates.

Cat Fund has full trust and Florida State credit for being able to issue bonds at reasonable interest rates to cover the cost of major storms. This borrowing is what allows the load of the Cat Fund would be less for reinsurance insurance companies to pay on the private market for this coverage - and, at least in theory, lead to insurance rates.

If our securities markets are not currently in a state of turbulence, this approach may have worked well for a long time.
 
The Cat Fund Florida is no exception.

As the Cat Fund seeks $ 28 billion in exposure it faces, he publicly acknowledged a deficit against the debt of about $ 18 billion.

This loss means it is very possible that after his company Florida home insurance meets its primary claim obligations after a hurricane, can not count on the Florida Cat Fund to reimburse losses above these levels. Clearly, this means that some Florida homeowners will not have their hurricane paid timely.

So why the rating agencies concerned about this difference?

When agencies publish their rating ranking in home insurance companies in Florida that they know you and your bank depend on these ratings to help predict the financial capacity of your insurance company to pay your claim promptly and satisfactorily. Among the many things that these rating agencies factor in their ranking is quality of reinsurance contracts - regardless of whether these contracts are purchased on the market or the state of private institutions such as the Florida Cat Fund.

When to see a deficit of 18 billion dollars of potential rating agencies in Florida Cat Fund, they know that the chances of an insurance company will not be able to meet their obligations increases considerably if reinsurance is little reliable. That's why they threatened to lower the rating of all home insurance companies in Florida that depend on the Cat Fund.

You will face nothing less than a major disaster - even if you pay for the mortgage on time every month.

Florida legislature does not close the deficit of the hurricane catastrophe fund in Florida during the 2009 session.

AM Best and Demotech lower notes of all home insurance companies in Florida May 2009.

Your mortgage company or the bank is notified of this damage and you immediately know that you need to find a new insurance company, more highly rated or you are in default on your mortgage off.

Because all home insurance companies in Florida are required to purchase certain layers of reinsurance Cat Fund, you will not be able to find even a company that will satisfy your mortgage lender in Florida.

His Florida mortgage company will take the necessary measures to protect the guarantee he has in his house, placing placing a forced insurance coverage at his home at about 4 times the amount you had already paid for your home insurance Florida - home insurance so if he had been buying his company, which had its rating downgraded was $ 4,000, the bank will intervene and buy a policy of forced bet a company of your choice, which will now it costs $ 16,000 per year!

You have to pay 4 times the cost of regular home insurance in Florida and you will not be a penny after a major hurricane in Florida, if you have a claim. You will be responsible to pay your bank for $ 16,000 a year the policy for each month that passes until it is possible for you to find a home insurance company in Florida with an acceptable credit rating for a mortgage company.

During this period of turmoil all real estate transactions in Florida are coming to a complete stop - which will exacerbate the housing crisis in Florida.

This degradation of the rating company insurance should take place until 15 May 2009, the legislature of Florida does not adequately address the shortage in the Fund Cat Florida - just two weeks before publishing 2009 Florida hurricane season.