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Insurance Rate Hikes Leaving Homeowners Breathless

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(STAN HONDA/AFP/Getty Images)

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CORAL SPRINGS (CBSMiami) – Insurance rates in Florida are already among the highest in the nation, but as insurers look to make what they claim are “market adjustments” to rates, some Floridians are finding they have to make a choice between paying for their insurance, or their home.

Linda Berman of Coral Springs said her homeowners insurance is driving her out of house and home. She opened her mortgage bill last Saturday and had sticker shock.

“I freaked out,” she said. “I didn’t know what to do.”

Berman’s monthly mortgage for the house she called home for a dozen years is jumping nearly $800 dollars a month, and most of that 200 percent increase was an insurance rate hike.

“I started shaking. I got on the phone with State Farm immediately,” Berman tells CBS 4.

The answers she got weren’t comforting.”I was told the rates are going up all over the state,” she said. “I can’t afford my mortgage going up nearly 800 dollars a month. Without notice. I don’t have it.”

Berman says she is disabled and her husband recently lost his job. Their 23 year old daughter who is a cancer survivor lives with them.

“I’ve been with State Farm for 30 years, and I don’t want to change,” she said.

But she may have no choice.

“I was told the only way to save my home is to go to Citizens,” the state run insurance carrier of last resort. But Citizens has issues too.

It has announced plans to shed 678,000 policies in Florida, with most of those policy holders  in South Florida.

Citizens said it must shrink to avoid a financial calamity if a major hurricane hits Florida this year. Citizens has managed to build up a $6 billion dollar war chest over the last six years without a major storm, but the insurer warns one hurricane could wipe out the fund completely.

Taxpayers would make up any loss, through surcharges on every insurance policy they own. Despite six years of not taking a direct hurricane hit, Florida insurance premium rates are skyrocketing.

“Insurance costs are claims costs, and those have not declined,” says Lynne McChristian of the Insurance Information Institute, a trade group.

“It’s not only hurricanes that drive costs, water losses are increasing and there are sinkhole losses,” she says.

Tuesday Citzens enacted multiple changes that will affect both new and current policyholders. For new policies, homeowners who need to join Citizens will have to submit written proof that there is no private insurer able to provide affordable coverage for their home.

For all customers, coverage for carports, screened enclosures and fences will no longer be offered and personal liability coverage limit will drop from $300,000 to $100,000.

“One thing to reduce rates is to shop around, even if you’ve done it before it’s time to shop again,” McChristian said.

“Also talk to your company about increasing your deductibles for hurricanes and all other calamities.”

That cuts cost, but also gives you insurance of potentially lower quality and coverage.

Linda Berman says she will most likely have to switch to Citizens, even though it means less coverage and a higher deductible.

“I’m being told if I don’t go to Citizens I can kiss my house goodbye,” says Berman. She says someone has to step up.

“We’re gonna lose income in the state of Florida because everyone’s leaving.”

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