The Florida Home Insurance Market is in Crisis

The Florida home insurance market has finally reached its breaking point. After many years of warning, the market has started to take a turn for the worst. It is a complicated issue with many moving parts. To make the best insurance decisions for you, we want to ensure you are informed about the current situation.

Why Is This Happening

The reasons the Florida home insurance market has started to unravel have built up over several years. There are a combination of reasons and concerns, including:

Assignment of Benefits (AOB) Abuse and Claims Litigation. AOB is an agreement that transfers an insurance claim from the homeowner to a third-party. It gives the third-party the right to file a claim, make repair decisions, and collect insurance payments. In some cases, the third-party will sue the insurance company for excessive amounts and leave the homeowner with unfinished repairs and no recourse. Read more about AOB and how it affects you as a homeowner here.

Hurricane and Other Major Catastrophes. The number of major catastrophic events around the world have risen in recent years including massive wildfires and devastating floods. The state of Florida also experienced several major catastrophes, including Hurricane Michael that devastated the Florida Panhandle in 2018. As the frequency and severity of catastrophic events increases, insurance companies must payout more in claims.

Rising Reinsurance Rates. Reinsurance is the insurance company’s insurance. It ensures the insurance company has the money available to pay for claims. The rising cost of reinsurance makes it difficult for some companies to secure the capital they need to remain financially stable.

What You Should Expect

As the home insurance companies continue to experience increasing claims, higher claim payouts, and rising costs, Florida consumers will see many changes to their home insurance, including:

Higher premiums. Insurance companies have been steadily raising rates for the last few years and that will continue for many years to come. Our agency routinely sees 20% to 40% increases in premium from year to year on home insurance policies. As the cost for insurance companies continue to rise, the expenses will be passed down to Florida consumers in the form of insurance rate increases.

Coverage reductions. No two insurance policies are the same and in the last few years, insurance companies have made changes to their policies to reduce coverage and minimize their exposure to possible high claim payouts. Many insurance carriers now limit water damage coverage to $10,000. Other insurance companies limit or do not offer coverage for animal liability. And some have limited coverage for screen enclosures that are common in the backyards of Florida homes. These and other types of coverage reductions will continue, so it is more important than ever that you read and understand your home insurance policy.

Non-renewals. Taking steps to limit their exposures and protect themselves, many home insurance companies will issue notices letting homeowners know they will not be renewing their policy. Homeowners will have to look for another option for their home insurance often resulting in less coverage at a higher premiums.

Stringent carrier requirements. Insurance companies have implemented restrictive new underwriting guidelines. Some insurance companies will only insure homes that are 2010 and newer or have a roof that has been replaced in the last 10 years. Additionally, most carriers perform inspections of the home and require repairs be made at the homeowner’s expense for any risks they believe may cause a future claim.

What Can You Do

Reach out to your lawmaker. The current trends in the Florida insurance market are unsustainable and will require major reform in the legislation to get the market back on track. Bills have been introduced to address the issues plaguing the market and driving up insurance costs. You can sign this petition to voice your support of these bills.

Be aware of insurance scams. We have heard so many stories of our clients having a public adjusters or roofer knocking on their door and soliciting them to make costly repairs and have their insurance company cover the costs. If this happens to you, call your insurance company first, before you sign any paperwork with a contractor. Your insurance company can assign an adjuster, assess the damage, and will often have preferred, reputable vendors they can recommend for any needed repairs.

Maintain your home and plan for major home repairs. Major home updates such as replacing your roof or unexpected plumbing issues are things every homeowner must deal with. Failing to regularly maintain your home could result in costly claims. Anticipating unexpected repairs and planning for major updates can lessen the burden when these things come up.

Understand your insurance policy. Review your home insurance policy annually and ensure the coverage amounts are appropriate and your deductibles are right for you. If you have questions about your policy, talk to your insurance agent.

Are you interested in more information about the state of the Florida insurance market? Here are some articles you can read:

Florida property insurance rates may spike. Here’s why

Windstorm premiums are soaring in Florida again

Florida homeowners may experience sticker shock when it’s time to renew their insurance

Millions of Florida homeowners set to suffer tidal wave of insurance rate hikes

Insurers sending letters to replace your roof or lose your coverage