Americans flock to Florida for low taxes and sunshine, but the hidden cost of rising insurance is also increasing.

Americans flock to Florida for low taxes and sunshine, but the hidden cost of rising insurance is also increasing.

Florida Homeowners Brace for Rising Insurance Rates

For years, homeowners insurance rates have been steadily increasing across the United States. However, the situation is even more dire in Florida, where inflation and severe weather have led to exorbitant construction costs and significantly raised the cost of rebuilding and replacing homes.

The Insurance Information Institute has projected that property insurance rates in Florida will increase by at least 40% in 2023. Mark Friedlander, the Institute’s Director of Communications, explained that Floridians are already paying more than homeowners in other states due to the unique circumstances of the state’s marketplace.

“Florida is a unique marketplace where you see a culmination of hurricanes and severe weather, leading to Floridians paying the highest average insurance premium in the US,” said Friedlander. He added that the average Florida homeowner pays nearly $6,000 for property insurance, which is triple the national average of $1,700.

The rising cost of homeowners insurance in Florida is a significant concern for residents and has the potential to undermine the state’s attractiveness as a relocation destination.

A Booming Population Exacerbates the Issue

Florida experienced a population surge during the COVID-19 pandemic. From April 2020 to April 2021, approximately 330,000 people moved to the state, equivalent to about 903 new residents each day. The warm weather year-round and the absence of state income tax make Florida particularly appealing to both upper-income households from high-tax states like New York and New Jersey, as well as low-income and middle-class families seeking an affordable cost of living.

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While these factors contribute to the state’s appeal, the soaring homeowners insurance premiums in Florida pose a real downside.

“Insurance Premium Creep” Hits Homeowners

Rick Sinkfield, a former homeowner in Florida, experienced a significant increase in property insurance premiums during his years of residence. “I started with a premium of about $7,000, which is already high, and by the time I moved, it was $10,000 a year,” Sinkfield shared. He observed that whenever there is a severe weather event, such as a hurricane, extreme wind, or flooding, it affects everyone and leads to what he calls “insurance premium creep.”

Sinkfield’s experience is representative of what many Floridians are facing. The steady increase in insurance premiums has become a concerning trend for homeowners in the state. Sinkfield estimated that his premium increased by $600 a year over a five-year period, emphasizing the unsustainable burden these hikes impose on homeowners.

Insurer Departures Drive Up Prices

Florida suffered an estimated $60 billion in insured losses due to Hurricane Ian in September 2022. The departure of many insurers from the state has further exacerbated the problem and caused property insurance rates to rise.

“Insurance company insolvency is a real problem in Florida,” warned Friedlander. The recent insolvency of United Property and Casualty Insurance Co., the seventh private insurer to face this issue, has left approximately 20,000 claims from Hurricane Ian unresolved out of the roughly 135,000 policies with the company.

Homeowners in Florida are now bracing themselves for a second consecutive year of double-digit increases in property insurance rates. In 2022, rates rose by 33%, far exceeding the national average of 9%.

Friedlander raised a critical concern, asking, “How many Floridians are living paycheck to paycheck or feeling financially maxed out? They cannot afford to bear these massive increases every year.”

Strategies for Affordable Homeowners Insurance in Florida

Given the rapidly rising cost of property insurance in Florida, it may become increasingly challenging for some residents to maintain their homes. The Insurance Information Institute, in conjunction with the Florida Legislature, advises against reducing or dropping coverage.

To alleviate the burden of high premiums, Friedlander suggests the following steps for homeowners:

1. Shop around for the best rates

“Get several quotes to make sure you are getting the best pricing and to get as close to what you can afford as possible,” advises Friedlander. It is essential to comparison shop and obtain quotes from multiple insurance companies to ensure consistent coverage. Evaluating the types of coverage, policy limits, and deductibles will help determine the most suitable and cost-effective option.

2. Bundle your insurance

Purchasing home and auto insurance from the same company can offer savings of up to 25%, according to Friedlander. Bundling insurance policies also simplifies bill-paying and record-keeping.

3. Increase your insurance deductible

Increasing the deductible on homeowners insurance can lower premiums. Friedlander recommends exploring the possibility of raising both the standard deductible and the hurricane deductible in Florida. However, it is crucial to acknowledge that a higher deductible means paying more out of pocket in the event of a claim.

4. Research discounts

“There are discounts that can be applied if you qualify, and it’s worth it to check out those options because they can save you real money,” advises Friedlander. For example, being a military veteran or a member of certain associations may offer insurance discounts. Additionally, loyalty discounts and claim-free discounts might be available based on an individual’s insurance history.

Taking these proactive measures can help Floridians navigate the challenges of rising homeowners insurance rates in the state. While the problem is significant, it is essential for homeowners to explore their options and strive for affordable coverage that protects their most valuable asset: their home.

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