Rising homeowner’s insurance premiums in Florida have created a crisis such that many can no longer afford to live here. Here in Florida, the average homeowner’s insurance policy costs over $6,000/year, 3 ½ times that of the rest of the United States. I’m a local Realtor® that’s lived here on the north side of Orlando for years and years, and I’ve watched the cost of my own homeowner’s insurance double in the last few years, and I’ve asked some difficult questions about the viability of my own real estate.

So today, I’ll be looking at what’s going on, what’s causing the Florida insurance crisis, what’s being done about it, and lastly, what YOU can do about it, so be sure to stick around for this last one, because I’ve got a couple practical tips that can save you some dough.

What’s going on?

Florida is, and has always been, a desired destination for retirees, but it’s more than that. It’s always been an affordable place to live, with so many Floridians of all ages migrating from tax-heavy states like California, New York, Massachusetts, and others. Now, we all know that the cost of a home has risen quite a bit in recent years along with the associated taxes, and that’s just part of life.

However, insurance costs have skyrocketed and many, especially those on a fixed income, simply don’t have the means to pay it. As such, many are rolling the dice and simply aren’t carrying ANY homeowner’s insurance at all. Of course, that’s only an option for those that DON’T have a mortgage, which is  the minority of homeowners. About 15% of homeowners in Florida don’t even carry homeowner’s insurance, compared to the national average of right around 7%.

And it’s not just for those that already own a home. As a local Realtor, these increased homeowner’s insurance premiums are decreasing the amount of house a home buyer can qualify for. So, if they used to be able to purchase, say a $300,000 home, today they might only qualify for a $275,000 home, which can make a huge difference, especially if you don’t know if insurance premiums might continue to rise, which leads to another issue of affordability.

What’s causing the Florida Insurance Crisis?

One major cause of rising homeowners’ insurance premiums is fraud. So many companies used to just stand on the ground, look up at someone’s roof and determine if it needed replacing. Then, they’d knock on the door and tell the homeowner that they could get a free roof, which sounded great to the homeowner. Then, they’d simply tell the insurance company it needed replacing, fill out some forms, and voila! A new roof, with little or no cost to the homeowner, would appear and the roofing contractor got paid-all without any price negotiation. Now, I don’t know if this is fraud, legal system abuse, or what, but they’ve made it more difficult for that to happen these days.

Plus, insurance companies were apparently being sued by anyone and everyone. My understanding is that it was the cost of attorney’s fees defending themselves from lawsuits, many of which were reportedly frivolous, that drove up the cost of homeowner’s insurance. One article I read noted that 80% of the national property claim lawsuits happened right here in Florida.

Yes, we’ve got hurricanes, too. However, in the last year, Florida had just ONE hurricane that impacted us. Now, I don’t want to downplay it too much, because that storm still caused between, like 3 and 5 BILLION dollars in damage, but it was a very light year for storms and our rates still skyrocketed! Of course, hurricanes are nothing new, but they’re a major expense for insurance companies. Hurricanes are also something that is in the back of most Floridian’s minds every summer because we count on insurance companies to protect us from catastrophic events like these hurricanes. In just the last three years, like 30 insurance companies have left Florida. Of course, FEWER insurance providers doesn’t do anything to lower the insurance premiums charged the remaining companies.

I understand that over 1.2 million people count on Citizens Property Insurance, which is supposed to be a low-cost insurance alternative for those who cannot obtain insurance otherwise. However, the cost for Citizens insurance is also getting out of control IF they’ll even cover you. I tried to obtain insurance with Citizens just last year and was rejected. I was fortunate that I was able to find someone else to cover me for this little 960 square foot concrete block home with a new roof, but as of today, I’m paying over $3,500 per year!

Before we get to what’s being done about this problem, if you’re thinking of moving to anywhere here in the Orlando area, I can refer you to a solid insurance agent, or help with ANY real estate need for that matter. Simply pick up the phone, and give us a call. We get these calls all the time and I love em’.

What is being done about Florida’s insurance crisis?

So, what is being done about the Florida insurance crisis? Florida has taken some action that is supposed to help with the Florida insurance crisis, but I’m still waiting to see its effects. In 2021 Florida passed Senate Bill 76, which was intended to curb rampant insurance fraud. Florida then started offering grants to help Florida homeowners strengthen their homes against storm damage. Then, Florida mandated that insurance companies may not be able to deny homeowners coverage based solely on the age of a roof, as long as it is less than 15 years old and has five years of useful life left on that roof. Florida also passed a bill that provides oversight to ensure that insurance companies aren’t behaving badly towards their customers. I don’t know that anything significant has changed here as we’re always hearing about homeowner’s claims being rejected, sometimes for questionable reasons.

Florida also restricted the rates insurance companies can charge for property insurance claim cases, which is supposed to address those attorney fees I spoke of earlier. Of course, this is not a complete detail of all that’s been done. Rather, it’s a summary of a few steps that the State of Florida has taken so far.

What can I do?

Some of you may be wondering, “what can I do” to protect myself from the Florida insurance crisis? First, get a four-point inspection and a wind mitigation, which are tools that insurance companies use to determine the risk of carrying you as a policyholder. Secondly, if those reports show deficiencies, make the appropriate repairs or upgrades. Yes, the replacement of an old roof is expensive, but you may end up paying for that new roof in the form of increased insurance premiums if you fail to do so. Next, shop your policy. Take the time to do your homework and check with numerous insurance agents to find you the lowest rate available.

Published on June 10. 2024 / no comments.