Florida’s homeowners pay some of the highest property insurance premiums in the country — an average of three times the national average.
The Florida Legislature has passed several measures they hope will bring premiums down in the long run, but there’s no relief in sight in the short term.
In fact, the Insurance Information Institute estimates premiums in the state will go up another 40-percent just this year.
That’s pricing some folks right out of their homes, and changing what many home buyers can afford.
It’s sticker shock for many Florida homeowners.
“Especially here along the water. The people that have been here for a couple years on the water. It’s a significant price increase on some of these premiums,” Salvator & Associates Insurance Agency, Inc’s Matt Salvator said.
“Homeowners, you know, you got to have a place to live. And rent is exorbitant also,” Dave Reed with Dave Reed Insurance said. “So it kind of puts you in a bind. You’ve got to live somewhere so they’re trying to cut coverages, raise deductibles, maybe take off some wind perils, trying to get the price down to where they can afford it.
For many homeowners, the premium hikes are just not sustainable.
Their mortgage company requires good insurance, but they can no longer afford it.
When they lose their coverage their mortgage company buys what’s called a “force-placed” insurance policy and makes the homeowner pay.
“I have people that are dropping their insurance,” Reed said. “I have people that have mortgages who are taking forced place insurance, which is always more expensive and doesn’t cover or insure much. So it’s really become a catastrophe here in Florida right now.”
Florida’s state run Citizen’s Insurance Company provides policies to people who just can’t find a reasonable policy in the private market.
The state expects the number of Citizens’ customers to swell to two million this year — up from one million last year.
But even Citizens is getting more expensive, with more strings attached.
“Probably the bulk of the ones we’ve got right now are winding up with Citizens,” Reed said. “But if you’ve got aluminum wiring , you can’t go with Citizens, or if the roof hasn’t been replaced, or if it doesn’t have enough life in it.”
“You know Citizen’s only writes up to 700,000,” Salvator said. “Anything over that and we have to go to surplus lines, and that’s where your $45,000 premiums are coming in.”
For people like Robin McArthur who sell homes for a living, property insurance is a growing obstacle to writing a deal.
“We just had one as a matter of fact, on the water, in Gulf Breeze, and the roof had to be replaced because of it.,” McArthur said. “Without the roof being replaced, the insurance company was quoting something like $60,000 a year, which was just insane.”
A number of factors are driving premiums up.
The costs of rebuilding and repairing a home are soaring with inflation.
Damage from storms is more severe and more frequent these days. And some estimates say 74-percent of all the property insurance claims filed in Florida are fraudulent — driving up legal costs.
So what can a homeowner or home buyer do?
“The only thing we can do is raising deductibles,” Reed said. “Maybe changing replacement costs to actual cash value.”
“In my opinion it’s time for folks to start thinking about higher deductibles,” Salvator said. “Start taking on a little more self -insurance. A little bit more of the risk. Seeing if your insurance company will allow you to bump up your deductibles a little bit.”
“Staying away from the water, buying newer construction definitely helps your rates for sure,” McArthur said. “You’ll pay a lot less because your home is built with the current codes.”
The Florida Legislature has passed measures to lower the number of fraudulent lawsuits by ending what are called one-way attorney fees, and assignment of benefits to contractors.
They’ve also provided a billion dollars for re-insurance for insurance companies — a financial safety net to help a company with too many claims after a storm.
Lawmakers hope that re-insurance, and the other measures, will lure more insurance companies to the state, and provide more options.
Since 2020, more than 15 insurance companies have been deemed insolvent in the state, and are no longer doing business here.