- Florida homeowners insurers are dramatically raising prices and refusing to renew policies.
- The causes of the higher rates include weather-related risks and increased claims frequency in the region.
- Savings opportunities, like wind mitigation discounts, can lower your home insurance costs.
The insurance market has become increasingly volatile in the United States in recent years, leading to inflated premiums for all insurance products.
In recent years, natural disasters and political unrest have reduced vendor risk appetite across the United States, driving up rates, says Ken Gregg, CEO of Orion180a
provider serving independent agents in the southeastern United States.
Florida, in particular, is seeing some of the highest home insurance rate increases and the highest number of policy non-renewals in the country. According to data from S&P Global Market Intelligenceby mid-April, the Florida home insurance market will see approximately 37,000 policies canceled.
Why is home insurance in Florida increasing?
Florida is experiencing the worst property insurance crisis in the United States. According to data from S&P Global Market Intelligence, at the end of 2021, Florida home insurers suffered a net revenue loss of $1 billion. Many providers are leaving the state, and major insurers like Geico and Progressive are canceling policies for area homeowners. Gregg cites a few reasons for this occurrence: risks from upcoming weather conditions, insurance scams and frivolous lawsuits.
Florida is the scene of regular floods and disasters caused by hurricanes. Insurers are bracing themselves for huge losses caused by water, wind and floods and, consequently, a loss of profitability. Florida hurricane season begins June 1, according to the Florida Division of Emergency Management.
Another reason Florida homeowners are seeing an increase in their premiums is due to insurance scams. Gregg says the increase in claims is “driven by ‘bad faith actors,’ in the contract and litigation markets.”
One of the main scams involves bad faith hedging contracts. Contractors ask you, the homeowner, to pay for a new roof with your insurance, claiming that they can offer a discount for your deductible. The scammer will have you sign an agreement allowing them to file a claim with your insurer. An adjuster will then visit your property to inspect the ‘damage’ (the reason the claim was made) and if they find little or no damage, your insurance company will refuse to provide compensation. The dishonest real estate contractor will then sue your supplier for underpayment and the insurer will either have to initiate legal proceedings or settle compensation out of court.
Gregg explains that the roof isn’t free for two reasons. First, your premiums will increase because you filed a claim for a new roof. And second, everyone who buys insurance will also have to pay for that new roof. As a result, the overall cost of premiums increases for policyholders. Due to a growing number of insurance scams and real estate lawsuits in Florida, insurers are seeing huge losses in net income.
How much does homeowners insurance cost in Florida?
In 2019, the average home insurance premium was $1,989 in the United States, according to the Insurance Information Institute. Florida’s average premium cost in 2022 is $3,585, a rate hike of about 55% over the past three years, according to Ensure.
Granted, homeowners across the country are seeing higher premiums, but not quite like Florida. Florida premiums are $2,187 higher than the national average. Below are the rates for some of the cheapest
options in Florida:
5 ways to reduce the cost of your home insurance
As insurance rates rise everywhere, there are several ways Floridians can reduce their home insurance costs and avoid police denial.
Compare the prices
Shop around and compare quotes each year to see if you can get a better deal elsewhere for the same level of coverage. Note that some insurers may charge you fees for early termination.
Look for discounts
Save on your insurance premiums by bundling several products such as your auto and home insurance policies. Discounts can also reduce your premiums. Insurers usually list the discounts they offer on their websites. Contact your insurance agent to see if you qualify for lesser-known discount opportunities.
Increase your deductible
Raising your deductible from $500 to $1,000 could save you up to 25% on your insurance bill, according to Insurance Information Institute. Be aware that deductibles may be subtracted from your total coverage amount.
Regularly maintain your home
Complaints can significantly increase your premiums and even be grounds for denial. Doing your due diligence in making sure your systems are working properly and identifying early signs of foundation problems will reduce the likelihood of major damage.
Fortify your home against wind damage
Fortifying your home’s structure and roof against wind-related damage can qualify you for wind mitigation discounts, says Gregg. This is especially important in Florida, where hurricanes are frequent and devastating.