Florida, known for its sunshine and sandy beaches, is facing a less glamorous reality as homeowners grapple with the escalating costs of home insurance. Floridian’s have seen premiums go up by more than 40 percent, 3.5 times the nation’s average and they are likely to keep rising due to a variety of factors. Homeowners with a mortgage required to have insurance – don’t have many options other than to pay or leave.

Increasing Frequency and Severity of Natural Disasters:

Florida is no stranger to hurricanes, floods, and other natural disasters. The severity of Hurricane Ian in southwest Florida and others throughout the state and recent year have led to a much higher number of insurance claims. Insurance companies, in turn, raise premiums to offset the increased risk and potential payouts.

Rising Sea Levels and Climate Change: 

Florida faces the brunt of climate change, with rising sea levels and increased temperatures. These environmental changes contribute to more intense storms and flooding, amplifying the risks associated with insuring properties in the state. Insurers factor in these long-term climate trends when calculating premiums, further impacting homeowners.

Building Code Upgrades: 

After the devastation caused by hurricanes, most recently Ian, and previously like Andrew and Irma, Florida has implemented stricter building codes. While these measures aim to protect homes from severe weather, they also mean increased costs for construction and repairs. Homeowners bear the brunt of these expenses through higher insurance premiums.

Litigation and Assignment of Benefits (AOB) Abuse:

Florida has been plagued by a surge in litigation and AOB abuse in recent years. AOB allows policyholders to assign their insurance benefits to a third party, often contractors, which can lead to inflated claims and legal battles. The associated legal costs are passed on to homeowners through elevated insurance premiums. Reforms passed last year by lawmakers have begun to limit lawsuits which should improve the situation, as if litigation costs go down, premiums should also go down.

Market Dynamics and Competition: 

The insurance market in Florida has become increasingly competitive, with fewer companies willing to underwrite policies in high-risk areas. After Hurricane Ian, seven insurance companies became insolvent. This reduced competition allows insurers to raise prices without fear of losing customers to competitors. As a result, homeowners are left with fewer options and higher premiums. Five new insurance companies have been approved to begin writing policies in Florida. However, homeowners will not see relief in the near future. 

As the state continues to adapt to a changing climate and regulatory landscape, homeowners are left grappling with the financial burden of protecting their homes in the face of increasing risks. However, there is new legislation SB2-A that was passed in the special session December 2022 which has begun to swing the pendulum. Yes, the costs are still high but the legislation has allowed more companies to be entertained and have started to open up their guidelines as well as we’ve seen new carriers open too. It may take a couple of years but I do see insurance premiums becoming more favorable to the insureds. Contact a Jones Family Insurance to review and quote your current policy with our line of carriers and also discuss bundling opportunities for your needs to save on premiums.