If you own a home in Florida, you may have noticed that your homeowner’s insurance premiums have gone up significantly in the past few years. According to the Insurance Information Institute, Florida homeowners are expected to see their property insurance rates jump 40 percent in 2023. This is on top of the already high average cost of home insurance in Florida, which is $4,218 per year for a typical policy with $300,000 in dwelling coverage and a $1,000 deductible. This is $1,441 more than the national average of $2,777.
Why are homeowners’ insurance rates so high and rising in Florida?
There are several factors that contribute to this trend, including:
Frequent and severe weather events:
Florida is prone to hurricanes, tropical storms, floods, and wildfires that cause extensive damage to homes and businesses. In 2020 alone, Florida was hit by twelve named storms, including Hurricane Sally and Tropical Storm Eta. These disasters result in billions of dollars in claims for insurers, who then pass on some of the costs to policyholders through higher rates.
Rising cost of construction and materials:
The cost of rebuilding or repairing a damaged home has increased over time due to inflation, labor shortages and supply chain disruptions. For example, the price of lumber has soared by more than 300 percent since April 2020 due to high demand and low supply. This means that insurers must pay more to settle claims, which also leads to higher premiums for homeowners.
Fraudulent and excessive lawsuits:
Florida has a high rate of litigation involving homeowners’ insurance claims, especially those related to water damage and roof damage. Some unscrupulous contractors and attorneys take advantage of a legal provision called assignment of benefits (AOB), which allows policyholders to transfer their rights to sue their insurer to a third party. This often results in inflated or fraudulent claims that drive up the cost of litigation and settlements for insurers. According to the Florida Office of Insurance Regulation, AOB lawsuits increased by 280 percent from 2013 to 2018.
Lack of competition and availability:
The Florida home insurance market is dominated by a few large companies that have the financial strength and capacity to withstand the risks and losses associated with the state. Many national insurers have either exited or reduced their presence in Florida due to the high costs and uncertainties involved. This leaves fewer options for homeowners to shop around and compare rates and coverage. In some cases, homeowners may have no choice but to obtain coverage from Citizens Property Insurance Corp., the state-run insurer of last resort, which charges higher rates than most private insurers.
What are some of the solutions to keep homeowners’ insurance rates from rising in Florida?
There are no easy answers to this complex problem, but some steps include:
Strengthening building codes and mitigation measures:
Homeowners can reduce their risk of damage and lower their premiums by making their homes more resilient to weather events. This may include installing hurricane shutters, impact-resistant windows, metal roofs, fire-resistant siding and other features that can withstand wind, water, and fire. Some insurers offer discounts for homes that meet certain standards or have certain certifications.
Reforming the legal system and AOB practices:
The Florida legislature has passed several bills in recent years to curb the abuse of AOB lawsuits and limit the fees and incentives for attorneys and contractors involved in such cases. These reforms aim to reduce the number of frivolous or fraudulent claims and lower the cost of litigation for insurers. However, some critics argue that these measures also limit the rights and protections of policyholders who have legitimate claims.
Encouraging more competition and innovation:
The Florida Office of Insurance Regulation has approved several new entrants and expansions in the home insurance market in recent months, hoping to increase the availability and affordability of coverage for homeowners. Some of these companies use technology and data analytics to offer more personalized and flexible products and services. For example, Slide Insurance is a digital insurer that specializes in home insurance and offers customized coverage based on the location, age, and condition of each home.
As a homeowner in Florida, you should be aware of the factors that affect your home insurance rates and what you can do to lower them. You should also shop around and compare quotes from different insurers at least once a year to find the best coverage at the best rate. Finally, make sure you understand your policy and know what is covered. That way, if you ever need to file a claim, you can maximize your benefits and minimize any potential losses.
If you’re looking for a homeowners insurance quote in Florida, you can call us or get an online quote. We offer a variety of coverage options to meet your needs and budget, including dwelling coverage, personal property coverage, liability coverage, and more. Our experienced agents can help you find the right policy for your home and answer any questions you may have about the process. Don’t wait until it’s too late – get a quote today and protect your home and family!
Robert Macoviak is the President of Oyer, Macoviak and Associates. Oyer, Macoviak and Associates is the oldest independent insurance agency in Boynton Beach and has been in business since 1953. Oyer, Macoviak and Associates are vested members of the community who are committed to doing business face-to-face and being your insurance advocate in times of need.