Buying a house is a major milestone in one’s life. For many, home is a safe place to relax and spend time with loved ones. The best way to protect your home from catastrophe is having an insurance policy that suits your needs. Unfortunately for Florida citizens, protecting their homes comes at a higher price.
The Florida homeowners insurance crisis has residents in a frenzy. In the current climate, the home insurance market is shaky, with rate increases residents can’t keep up with. Many insurers are pulling out of the state or hiking their prices up over double what they used to be. There are multiple factors at play, and it’s important to note that the crisis didn’t happen overnight; there has been a gradual decline in the market’s stability that has finally reached its boiling point.
What’s Happening in Florida?
Home insurance companies are leaving the Sunshine State in droves, leaving homeowners scrambling to find new insurers. As a result of the ongoing property insurance crisis, homeowners are seeing an exponential increase in their premiums or outright cancellations of their plans. Some insurance companies are opting for nonrenewals instead of canceling entirely and tightening their claim requirements.
These increasing premiums put pressure on residents who can’t afford to keep up with the rising costs. According to an article by USA Today, some residents are carving out their budgets to keep up with the rising prices of their insurance premiums and necessities like groceries. Others are considering leaving the state entirely as they continue to be pushed farther north from the southern portions of Florida.
Why Home Insurance Companies are Leaving Florida
Insurance companies are being driven out of the state by skyrocketing litigation costs and payouts for claims. For many, the risk simply isn’t worth the reward. Those who have chosen to remain in the state face a difficult path. While some companies are increasing their prices and tightening requirements to keep up with the barrage of claims, others are going insolvent, and their policies are transferred to another insurance company as a result.
A few insurance companies that have opted to cancel their policies include Southern Fidelity, Lighthouse, Avatar Property & Casualty, and St. Johns. Southern Fidelity has since been liquidated, having lost its financial stability rating from Demotech and failing to secure reinsurance. Some insurance companies are benefiting from the emptying market; Citizens Property Insurance has experienced rapid growth due to the number of policies being written.
Home insurance fraud is plaguing the peninsula, which revolves largely around roofing claims. Contractors go from neighborhood to neighborhood, knocking on doors and offering to inspect the homeowner’s roof. These fraudsters are drawn to neighborhoods impacted by severe weather, using the higher likelihood of damage to their benefit.
Upon inspection, damage is claimed to have been found, regardless if damage is present. Being none the wiser, the homeowners sign an agreement giving the contractor rights to file their claim, all under the guise of getting a new roof. The contractors take the claim to the insurance company, which eventually pays out.
Mother Nature Always Wins
Ideal conditions make Florida a hotspot for severe weather activity. Living there means accepting a higher level of risk than other states may face. Premiums in Florida are higher than the national average and continue to rise. As insurance companies pull out and premiums increase, homeowners are anxious for coverage before the next disaster strikes.
USA Today also spoke to multiple Floridians regarding their home insurance increases. One resident impacted by Hurricane Ian was brushed off when they tried filing a claim with United Property & Casualty. The damage to their home included a roof that would need to be replaced, but the cost of the damages fell short of their deductible. UPC refused to pay for the damages and eventually went insolvent.
Though it depends on your policy, homeowner’s insurance does not typically cover floods. Flooding is a very real risk in Florida with its wetlands and increased likelihood of a storm occurring. Adding flood insurance to a home insurance policy can be costly, but it is an important addition that Florida residents shouldn’t forgo.
Being no stranger to storms and often battered by hurricanes, Florida residents know to prepare for the worst. Insurance is by far their strongest defense against disaster; the recent Hurricane Ian is a prime example of nature’s power. Property damage is bound to occur during hurricane season as high winds rip into structures and topple trees.
What Florida is Doing About it
While the state cannot prevent natural disasters from happening, Florida is tackling the ongoing crisis through legislation. Lawmakers are attempting to reform the insurance market and how claims are paid. In addition to insurers being riddled with fraudulent roofing claims, they also had to cover the attorney fee for the claimant. Now, Florida is doing away with the single-party responsibility, lifting some of the financial burdens for insurers.
While a solution that benefits both parties continues to be hammered out, there is still a way to go in rehabilitating the market. Homeowners should stay alert to policy changes and consult their insurance agents about plan coverages.
How We Can Help
Feeling unsure about the next steps? The Horton Group is here for you. Our Florida personal insurance team can get a policy in place for you and your family so you can rest easy. Visit our office or talk to a personal insurance advisor today!
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.