Help Me Howard: Windstorm

WSVN -- James Magill is a collector.

James Magill: "I collected everything. Here you go with baseball cards, football cards, basketball cards."

But by far his favorite: Records.

James Magill: "This is 10,000 records."

Now for people who grew up on DVDs, music used to play on these 45s.

And if you remember them then you probably remember this: A jukebox -- which James fills with oldies.

James Magill: "I used to get them for a nickel and dime at Good Will and Salvation Army."

That was when gas was 50 cents, and you did not have to be rich to afford homeowner's insurance.

James Magill: "I call it extortion. Extortion, I'm being extorted."

James was stunned when he got his homeowners insurance bill this year.

James Magill: "Three thousand dollars. That was almost an increase of 300."

James didn't like it, but he knew he had to write the check.

James Magill: "To me that was a contract from June 25th, 2006 to 2007, $3,000. I paid it. I didn't like it, but I paid it."

Then, a few weeks later, he got another letter from his insurance company.

James Magill: "We want you to pay $5,000 more within two weeks."

James was floored. Not only was the time to raise another $5,000 unfair, but he thought his year-long policy that he had paid for was supposed to be good for the year.

James Magill: "I would think that if they send you a bill or policy, and the policy is in effect for a year, that's a contract."

He battled his insurance company, andm like the rest of us, lost.

But to find out if an insurance company can stop in the middle of a policy and raise their rates, James called Help Me Howard.

Howard Finkelstein: "No, insurance is a contract, and you cannot change the terms in the middle. Unless the insurance company determines that the house is underinsured -- meaning if the coverage is lower than what it would cost to rebuild it -- then the insurance company can ask you to increase your coverage."

And that's just what happened in this case. When Help Me Howard contacted Florida Peninsula, they told us James was insured up to $114,000. But based on their assessment of his home this year, they determined it would take $333,000 to rebuild his house at current construction rates.

So that's why they sent him a new bill telling him he had to increase his coverage.

Howard says if you get a similar bill, you can refuse the increase.

Howard Finkelstein: "Of course, if you do that, the insurance company can refuse to renew you. The best thing to do: don't assume the insurance company knows what it will cost to rebuild your home. Talk to some contractors to get an estimate. Bottom line: you don't want to insure it for too much or too little. You need to find the value that's just right ... to keep your premiums as low as possible."

In James' case, the insurance company lowered the insured value of his home.

That dropped his insurance bill by $1,100.

James says that is good, but he still had to pay $9,000 for insurance, which he will not be able to do for long.

James Magill: "I'm getting ready to retire. Do you think I'm going to be able to pay that kind of money on a retirement salary?"

Now, before you try to lower your reconstruction rate, if your house is totally destroyed, you will only get the amount of money it was insured for.

So if you insure for $250,000 and it takes $350,000 to rebuild your house, that $100,000 difference comes out of your pocket. If you don't have it, your home may never get rebuilt. Needless to say, home insurance has become a frightening mess.

Blown away by a problem? Want to construct a solution? Contact us. Our legal advice is not at a premium, but it's accurate, and it's free.

FOR MORE INFORMATION:

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