Happy Friday! Today is National College Colors Day, so be sure to wear your favorite school’s colors.
Situation Awareness: If we hold Orange County real property in trust for you, please note that the property appraiser has amended all of the TRIM notices we received. The county refuse and recycling rate is increasing to $290 in 2024 rather than $260, as stated on the TRIM notice.
Also, note that appeals to the Valuation Appeals Board are due by September 5. We are still going through all the TRIM notices that the property appraisers mailed out on August 11, but the hurricane put a crimp in our plans. If you haven’t received your TRIM notice yet, don’t hesitate to contact us or go online to the property appraiser of the county where your trust property is located to review the TRIM notice.
1 big thing: Idalia first test of new insurance laws
Hurricane Idalia was just shy of being a Category 4 storm when it struck Florida 190 miles north of Tampa earlier this week.
Why it matters: It’s the first hurricane that will test Florida’s latest insurance laws we covered here before. We’ll see how insurance companies respond to damage claims in light of the new laws and in the face of smaller expected losses estimated to be around $9.36 billion.
State of play: The latest legislation
prohibits assignments of benefits to contractors, making it more difficult to find contractors to make repairs quickly in return for direct payment from the insurer,
provides a $1 billion taxpayer-funded reinsurance backstop to assist insurers in mitigating their losses in a catastrophic event,
severely limits consumers’ ability to sue insurers who refuse to pay valid claims,
makes it more difficult and expensive to find an attorney to sue an insurer since losing insurance companies are no longer required to pay the winning consumer’s attorney’s fees, and
raises Citizens Property Insurance rates to narrow eligibility for coverage so that consumers are being “depopulated” from Citizens to private insurers.
Florida’s home insurance premiums are the highest in the nation at four times the national average and rising. Floridians pay the most for coverage with little recourse if an insurer denies coverage or doesn’t pay a claim in bad faith.
What they’re saying: According to the same story quoting the governor, the Office of Insurance Regulation sent a memo to the insurance industry, reminding them that the new laws require insurers to adopt “best practices” when handling claims and that they can be punished if they fail to follow them.
The “best practices,” written by insurance industry lobbyists, have no requirement that claims be granted and paid. Just that they be “properly and timely resolved.”
The big picture: Insurance industry employees donated at least $3.9 million to the governor’s campaign and his political action committee between January 2018 and December 2022. A Heritage Insurance Subsidiary and People’s Trust Insurance donated a total of $125,000 to his 2023 inauguration celebration, according to a report by the American Federation of Teachers and several other consumer advocacy groups.
Once the Idalia claims are processed, time will tell if those donations and the legislation they purchased speak louder than the governor’s hurricane press conference statements.
2. Insurance Coverage for Properties in LLCs or Land Trusts
Insurance coverage for properties held in LLCs or land trusts in Florida is a significant issue, with high premiums and insurers pulling out of the state due to hurricane losses. It is recommended to list the land trust and its trustee as the named ‘insured’ on the policy application to ensure coverage.
Why it matters: Naming the trustee as the insured establishes their ‘insurable interest’ in the property, making it difficult for insurers to deny coverage. Additionally, naming the beneficiary as an ‘additional insured’ ensures both parties receive notices and can claim losses if needed.
When the property insurance was in the name of someone who did not hold equitable or legal title to the property (e.g., the human member of an LLC was the named “insured” in the policy on property owned by the LLC), insurers have denied coverage of losses.
The trustee holds all legal and equitable title in the property, so it has an ‘insurable interest’ under Section 627.405 of the Florida Statutes.
The beneficiary is entitled to the proceeds, rents, and income from the real property, so they should be listed as an ‘additional insured.’
Coverage cases are complicated, with judges having to parse the English language, the statute’s plain meaning, and the definitions of terms outlined in the insurance contract.
Complexity means they are also expensive to litigate, so we recommend avoiding such disputes.
Naming the trustee as trustee of the land trust as the insured in an insurance contract should avoid litigating whether the “insured” had an “insurable interest” to make the insurance policy enforceable or void.
If the beneficiary is the named “insured” and the trust is only the “additional insured,” then the insurer could deny coverage of a claim, arguing that the beneficiary didn’t have an “insurable interest” in the covered property.
The big picture: Being in the middle of Florida’s hurricane season brings thoughts of insurance to the front. It’s a bad time to discover that a policy is unenforceable because of a technicality.
3. Catch up fast
China’s housing market and largest homebuilder are melting down. What does that mean for the rest of the world? CNN
U.S. mortgage application volume increased for the first time in five weeks. The M Report
The average 30-year mortgage interest rate dropped again last week to a three-week low, but are still over 7%. Investopedia
Signed contracts for homes rose for the second month in a row. Realtor
According to ADP, only 177,000 new jobs were added to the payrolls in August, and the second-quarter GDP was revised down to 2.1% from the previously reported 2.4%. All of this supports a Fed pause on any rate increase at its next meeting, and indicates that we’re coming in for a soft landing rather than a recession after the pandemic. Bloomberg
4. Pic of the day
I read an intriguing article about new old age in The Atlantic (subscription) this week. It got me thinking about retirement with intention.
Harvard, Stanford, Notre Dame, University of Chicago, and other universities across the country have programs of study targeted at those who are recently retired or planning to retire soon.
The programs are given names like the “Distinguished Careers Institute” or they have “leadership” in their title. They’re open only to students in their 50s and 60s who are retiring from their main careers and trying to determine what to do with the rest of their lives.
They sound like group sabbaticals where a small group of folks in the same stage of life get to throw away their resumes and rediscover themselves for what they want to do with the rest of their lives.
Many of us are defined by our careers, successes, and failures for the first 60 years of our lives.
We fail to plan intentionally for what we will do in the next 30 to 40 years when that career ends.
We sleepwalk into retirement aimlessly, quickly tiring of travel, lunches, golf, casinos, cruises, and crafts.
Ennui leads to inactivity, physical decline, and cognitive decline.
The university institutes are often expensive and selective, geared toward the most successful (read: wealthy) retirees.
But all of them have a common theme: creating a cohort of those in this stage of life, searching for a purpose in their next phase of life that is unrelated to the previous phase.
Yes, but: Do these programs have to be expensive, structured, or selective? Couldn’t simple coaching programs, masterminds, and other groups serve the same purpose of shepherding us from workism to our encore years?
The bottom line: If you’re 39, 45, 57, or 65, it’s not too late to start thinking about what you will be doing in your second adulthood. I, for one, will not wait to consider it when I’m 64. I’m thinking about it now.
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Be on the lookout for our next issue!