Huge increase in Florida home insurance cost

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oldmotos
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Huge increase in Florida home insurance cost

Post by oldmotos »

We were just notified that the insurance on our SW Florida beachfront condo is going up 320% this year. The condo board said many insurers have pulled out of Florida and there is little competition. The building had no damage from Hurricane Ian except for some minor landscaping damage.
When researching this, I found that fraudulent claims might be more to blame than Florida’s weather. Florida accounts for only 9 percent of the country’s home insurance claims but 79 percent of its home insurance lawsuits. An insurance reform bill was just signed into law last month to hopefully slow this down. Anyone watching TV in Florida has seen the constant barrage of ads by law firms.

I would like to know what insurance increases other Florida homeowners are seeing? And if the increases are leading to lower property values?
BogleTaxPro
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Re: Huge increase in Florida home insurance cost

Post by BogleTaxPro »

oldmotos wrote: Tue Jan 31, 2023 10:56 am We were just notified that the insurance on our SW Florida beachfront condo is going up 320% this year. The condo board said many insurers have pulled out of Florida and there is little competition. The building had no damage from Hurricane Ian except for some minor landscaping damage.
When researching this, I found that fraudulent claims might be more to blame than Florida’s weather. Florida accounts for only 9 percent of the country’s home insurance claims but 79 percent of its home insurance lawsuits. An insurance reform bill was just signed into law last month to hopefully slow this down. Anyone watching TV in Florida has seen the constant barrage of ads by law firms.

I would like to know what insurance increases other Florida homeowners are seeing? And if the increases are leading to lower property values?
Last year's discussion here: viewtopic.php?t=386973
MGBMartin
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Re: Huge increase in Florida home insurance cost

Post by MGBMartin »

Homeowners insurance in Florida is a mess and don’t expect that recently passed insurance legislation to help the homeowners.
My insurance company dropped me a year or so ago. They were pretty much the only company I had any faith in. My agent sent me quotes that were triple what I was paying from companies I’d never heard of.

High insurance prices don’t seem to be slowing down the number of folks moving to Florida or the above average home price increases.
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30west
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Re: Huge increase in Florida home insurance cost

Post by 30west »

This is why so many Florida homeowners don't have insurance. Are you feeling lucky?
LittleMaggieMae
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Re: Huge increase in Florida home insurance cost

Post by LittleMaggieMae »

For the OP, insurance in Florida has always been a "challenge" and it was expensive.

And the "fraud" thing (especially for roofs) - has been going on for years.

And yes the cost for insurances on my Florida properties has jumped up dramatically starting in 2020.

On one property, the year I paid off my mortgage 2020. my insurance dropped me after 12 years of insuring my property. Shopping around for new insurance was somewhat of a "joke" - I was working with a broker and getting quotes that were 2 or 3 times what I was currently paying. I started calling around to insurance agents - and one was more than happy to give me a policy - which I paid for right away - ONLY TO BE DROPPED BY THAT INSURER 3 months after the agent wrote the policy. I assume I "fattened" the agents wallet in some way... and yes, I did get a refund that was prorated. I went back to the broker to get a policy and am paying an outrageous amount for insurance.

I also have a new property (purchased late 2019) with a mortgage. I haven't been dropped by the insurer yet. But the cost of the insurance has gone up dramatically each year. My mortgage payment break out now shows the escrow amount for my insurance and property taxes has surpassed the Principle and Interest of my loan (and it only took 3 years for this to happen). I put 20% down on the property.


Do not expect any legislation to magically "fix" the insurance problems in Florida - and don't expect it to magically lower your insurance costs.
an_asker
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Re: Huge increase in Florida home insurance cost

Post by an_asker »

oldmotos wrote: Tue Jan 31, 2023 10:56 am We were just notified that the insurance on our SW Florida beachfront condo is going up 320% this year. The condo board said many insurers have pulled out of Florida and there is little competition. The building had no damage from Hurricane Ian except for some minor landscaping damage.
When researching this, I found that fraudulent claims might be more to blame than Florida’s weather. Florida accounts for only 9 percent of the country’s home insurance claims but 79 percent of its home insurance lawsuits. An insurance reform bill was just signed into law last month to hopefully slow this down. Anyone watching TV in Florida has seen the constant barrage of ads by law firms.

I would like to know what insurance increases other Florida homeowners are seeing? And if the increases are leading to lower property values?
I am on the board of our condo's HOA. What your board said is accurate. But isn't the insurance being handled by the HOA, like ours is?

FWIW, our condos are two-storey buildings and, per our insurance agent, our insurance would also have gone up significantly more were it not for the fact that we just replaced our roofs in the fall.

Our insurance also went up, though not as high as yours. Being coastal adds a whole level of magnitude on these expenses. :oops:
LittleMaggieMae
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Re: Huge increase in Florida home insurance cost

Post by LittleMaggieMae »

30west wrote: Tue Jan 31, 2023 12:14 pm This is why so many Florida homeowners don't have insurance. Are you feeling lucky?
Depends on the "value" of your property :)
KESP
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Re: Huge increase in Florida home insurance cost

Post by KESP »

A friend just had his entire roof replaced after minor damage in the most recent hurricane. Aren't there insurance adjusters in Florida? Don't they go out and inspect the damage before approving repairs? Years ago, a neighbor's tree took out our entire deck. We couldn't do anything until the insurance company gave the ok to replace for a certain dollar amount.
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oldmotos
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Re: Huge increase in Florida home insurance cost

Post by oldmotos »

I am on the board of our condo's HOA. What your board said is accurate. But isn't the insurance being handled by the HOA, like ours is?
Yes, the insurance is paid by the HOA but the cost is of course passed on to the condo owners. We also have a policy on the condo interior.
an_asker
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Re: Huge increase in Florida home insurance cost

Post by an_asker »

oldmotos wrote: Tue Jan 31, 2023 12:56 pm
I am on the board of our condo's HOA. What your board said is accurate. But isn't the insurance being handled by the HOA, like ours is?
Yes, the insurance is paid by the HOA but the cost is of course passed on to the condo owners. We also have a policy on the condo interior.
Makes sense! :sharebeer
Topic Author
oldmotos
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Re: Huge increase in Florida home insurance cost

Post by oldmotos »

T
his is why so many Florida homeowners don't have insurance. Are you feeling lucky?
We share a Florida vacation house with 2 other couples on which we have paid high insurance premiums for 12 years with no claims. Every year we discuss dropping all but the liability insurance as the lot is worth nearly as much as the total property value. So far, we have kept the insurance but if we get a big premium increase we may cancel. Is there any data on what percentage of Florida homeowners go without insurance?
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Artsdoctor
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Re: Huge increase in Florida home insurance cost

Post by Artsdoctor »

Although California and Florida have different risks, we're both experiencing insurance-related issues. Policy premiums in California have increased and some policies have been cancelled. Insurance companies may not find community and state markets profitable, and I'd be hard-pressed to imagine rates actually coming down. Here's an article from Moody's which you might find helpful but there are dozens of academic, scientific, and economic articles focusing on the same thing.

https://www.moodys.com/web/en/us/about/ ... ofits.html
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Re: Huge increase in Florida home insurance cost

Post by finfire »

My agent had me go with a citizens insurance policy. Much cheaper. They are a non profit, maybe state subsidized?

Have you looked into that? They insure owners that find it difficult to get (affordable) insurance.
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Artsdoctor
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Re: Huge increase in Florida home insurance cost

Post by Artsdoctor »

finfire wrote: Tue Jan 31, 2023 1:18 pm My agent had me go with a citizens insurance policy. Much cheaper. They are a non profit, maybe state subsidized?

Have you looked into that? They insure owners that find it difficult to get (affordable) insurance.
Citizens is the state-sponsored insurance company in Florida. It's the insurer of last resort. This is a terrific Bankrate article which goes into more detail:

https://www.bankrate.com/insurance/revi ... insurance/
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Svensk Anga
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Re: Huge increase in Florida home insurance cost

Post by Svensk Anga »

My Florida HOI is up 45% this year with February renewal. We are well inland on the peninsula.

My Michigan HOI was up 17% for my October renewal. I guess that's a measure of general construction cost inflation which you could see anywhere.
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Svensk Anga
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Re: Huge increase in Florida home insurance cost

Post by Svensk Anga »

Zillow says my FL house value is 9.3% off its peak in June. My Michigan house is 7.0% off its peak, also June. I think that is mostly due to mortgage rate movements.
tortoise84
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Re: Huge increase in Florida home insurance cost

Post by tortoise84 »

2022 $1,675
2023 $3,105 +85%
American Strategic Insurance, an affiliate of Progressive. At least I didn't get dropped.
talzara
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Re: Huge increase in Florida home insurance cost

Post by talzara »

oldmotos wrote: Tue Jan 31, 2023 10:56 am We were just notified that the insurance on our SW Florida beachfront condo is going up 320% this year. The condo board said many insurers have pulled out of Florida and there is little competition. The building had no damage from Hurricane Ian except for some minor landscaping damage.
When researching this, I found that fraudulent claims might be more to blame than Florida’s weather.
It is both hurricanes and insurance fraud.

The hurricanes are what made the industry unprofitable. The homeowners insurance industry in Florida last made a profit in 2016. Every year has been unprofitable since then except 2021, when there were no hurricanes in Florida and the industry broke even.

The insurance fraud is what caused the current insurance crisis in Florida. Since no hurricanes hit Florida in 2021, the industry should've made a 30% underwriting profit. However, the industry only broke even. Homeowners insurers in Florida need very large profits in good years to pay for losses in bad years. If they barely break even in good years, then the financial model doesn't work.

Rates would be going up even without the fraud. The hurricane models used for the last 20 years have been too optimistic, and the modeling companies are updating their models to predict more hurricanes. As the Florida insurers adopt the new hurricane models, they have to raise rates to pay for the predicted hurricane risk. Even worse, interest rates are going up, which increases the cost of reinsurance and CAT bonds.
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Re: Huge increase in Florida home insurance cost

Post by brian91480 »

oldmotos wrote: Tue Jan 31, 2023 10:56 am When researching this, I found that fraudulent claims might be more to blame than Florida’s weather. Florida accounts for only 9 percent of the country’s home insurance claims but 79 percent of its home insurance lawsuits. Anyone watching TV in Florida has seen the constant barrage of ads by law firms.
This is a good analysis. I helped my brother move to Tampa Bay last year. He is was more inland... not near the coast line / St. Pete. Every 100 feet driving on the freeway was another billboard for legal services. It was comical. Florida must be the lawsuit capital of the world... for more than just homeowners claims.

So your options are. ..

1. Not insure the house. That's way too risky for me.

2. Take it up the tailpipe... and pay + 320%

3. Jack up your deductible... which hopefully would lower your premiums. That's assuming you could afford to pay more if you filed a claim someday.

I'd vote for option #3. I doubled my homeowner's deductible a few years ago from $1,000 to $2,000. That had a decent effect on my premiums.

--- Brian
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Re: Huge increase in Florida home insurance cost

Post by Parkinglotracer »

Our Florida house insurance went from $2200 to $2900 a year In Dec 2022. We raised our named storm deductible to keep it from going higher. We are with citizens and are in Tampa/St Pete area. Yes homeowners insurance appears to be a mess. USAA or any well known companies won’t write policies in our neighborhood. I had never heard of any of the companies that do.
finfire
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Re: Huge increase in Florida home insurance cost

Post by finfire »

Artsdoctor wrote: Tue Jan 31, 2023 1:25 pm
finfire wrote: Tue Jan 31, 2023 1:18 pm My agent had me go with a citizens insurance policy. Much cheaper. They are a non profit, maybe state subsidized?

Have you looked into that? They insure owners that find it difficult to get (affordable) insurance.
Citizens is the state-sponsored insurance company in Florida. It's the insurer of last resort. This is a terrific Bankrate article which goes into more detail:

https://www.bankrate.com/insurance/revi ... insurance/
"To qualify for a policy from Citizens, shoppers must prove that the private market quotes they received are more than 20 percent higher than Citizens’ rate. "

Worked for me. Cheaper insurance and the same , sometimes better terms. Easy to get rates that are 20% higher than citizens.

It "has become an increasingly important part of the Florida home insurance market in the last few years, as many private carriers seek to stop writing home insurance policies in the state."
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Raraculus
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Re: Huge increase in Florida home insurance cost

Post by Raraculus »

30west wrote: Tue Jan 31, 2023 12:14 pmThis is why so many Florida homeowners don't have insurance. Are you feeling lucky?
*cries in Florida* Why, yes, I feel lucky. :shock:

I'm hoping the recently-passed homeowner's insurance reforms will have an impact on premiums going forward in 2023 and beyond.
invest4
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Re: Huge increase in Florida home insurance cost

Post by invest4 »

January Renewals See Hardest Property Catastrophe Reinsurance Rates in Generation

https://www.insurancejournal.com/news/ ... 701632.htm
Golf maniac
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Re: Huge increase in Florida home insurance cost

Post by Golf maniac »

It is not only homeowners insurance that is going crazy in Florida but auto insurance premiums are significantly higher. The only thing you can do is shop around and see if you can get a better deal. I saved $400 off of my 6 month auto renewal and $300 on my homeowners policy for the year. I expect the new company will slowly raise rates and I will be shopping again in a few years.
GP813
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Re: Huge increase in Florida home insurance cost

Post by GP813 »

Blaming lawyers and lawsuits is a cop out. While there were some storm chasers looking to file lawsuits and then do expensive roof replacements, the fact is that this state has very bad weather events and very poor roofing/building codes that is further eroded by lackadaisical building inspection. After Irma in 2017 half of the homes in my old neighborhood had roof replacements within 2 years but the insurance companies were mostly denying claims. It was obvious that the mass failure of roofs many of which were rated to last decades was the cause of storm damage.

The state needs to make roofing standards better and more professional. We are now facing the reality of Cat 4/5 storms not being once in a century events but being quite frequent. And if you live by the beach or other waterfront you should pay a lot more for insurance. Inland homeowners have been subsidizing beachfront property for decades.

The new Florida bill continues this subsidy to waterfront owners by requiring everyone who joins the state insurance carrier to also purchase flood insurance even if they don't live anywhere near a flood-zone.
tigerTiger
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Re: Huge increase in Florida home insurance cost

Post by tigerTiger »

finfire wrote: Tue Jan 31, 2023 1:18 pm My agent had me go with a citizens insurance policy. Much cheaper. They are a non profit, maybe state subsidized?

Have you looked into that? They insure owners that find it difficult to get (affordable) insurance.
The problem with citizens insurance is that their liability coverage is no more than 100k. I have a rental property that need higher liability coverage. The umbrella won't insure underlying policy with fewer than 300k liability.
oysterboy
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Re: Huge increase in Florida home insurance cost

Post by oysterboy »

So, with the absence or unaffordability of private insurance, it appears Citizen will be absorbing the risk that sophisticated insurance carriers find unprofitable, and doing so at a lower premium offered by those few who remain in the market. Presumably, Florida's general population will be covering the anticipated losses that caused private carriers to abandon the market. How is Citizen funded?
GP813
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Re: Huge increase in Florida home insurance cost

Post by GP813 »

oysterboy wrote: Fri Feb 03, 2023 5:07 pm So, with the absence or unaffordability of private insurance, it appears Citizen will be absorbing the risk that sophisticated insurance carriers find unprofitable, and doing so at a lower premium offered by those few who remain in the market. Presumably, Florida's general population will be covering the anticipated losses that caused private carriers to abandon the market. How is Citizen funded?
Citizens was created by the Florida Legislature in August 2002 as a not-for-profit, tax-exempt, government entity to provide property insurance to eligible Florida property owners unable to find insurance coverage in the private market. Citizens is funded by policyholder premiums; however, Florida law also requires that Citizens levy assessments on most Florida policyholders if it experiences a deficit in the wake of a particularly devastating storm or series of storms.

Citizens operates according to statutory requirements established by the Florida Legislature and is governed by a Board of Governors. The board administers a Plan of Operation approved by the Florida Financial Services Commission, an oversight panel made up of the Governor, Chief Financial Officer, Attorney General and Commissioner of Agriculture.
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Elle_N
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Re: Huge increase in Florida home insurance cost

Post by Elle_N »

GP813 wrote: Fri Feb 03, 2023 8:24 pm Citizens was created by the Florida Legislature in August 2002 as a not-for-profit, tax-exempt, government entity to provide property insurance to eligible Florida property owners unable to find insurance coverage in the private market. Citizens is funded by policyholder premiums; however, Florida law also requires that Citizens levy assessments on most Florida policyholders if it experiences a deficit in the wake of a particularly devastating storm or series of storms.
I have been pondering where things would end up, taking the numbers to their logical extreme if weather and ensuing damage continue to defy actuarials. I see statute currently limits these special assessments/surcharges to a maximum of 15% per account. See https://www.citizensfla.com/-/citizens- ... icane-tax- . Insurance premiums would keep going up. People nonetheless would likely keep buying in Florida, computing it's worth it for the lifestyle most of the year or in good weather years. Market equilibrium would be reached. It "just" becomes quite expensive to live in Florida. Meaning the workforce might suffer. This is the "glass half empty" viewpoint. If weather patterns continue, is there an opposite, "glass half full way" to see things?

I am also aware the federal government is funding some voluntary re-location programs.

I am trying to look at this "by the numbers" as people, including myself, contemplate where their next home might be.
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ScubaHogg
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Re: Huge increase in Florida home insurance cost

Post by ScubaHogg »

talzara wrote: Tue Jan 31, 2023 7:45 pm The hurricane models used for the last 20 years have been too optimistic, and the modeling companies are updating their models to predict more hurricanes.
How insanely optimistic were the models if that 20 year period included a 10-year plus period where Florida was hit with zero hurricanes?

https://www.miamiherald.com/news/weathe ... 42700.html
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talzara
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Re: Huge increase in Florida home insurance cost

Post by talzara »

ScubaHogg wrote: Sat Feb 04, 2023 1:51 pm How insanely optimistic were the models if that 20 year period included a 10-year plus period where Florida was hit with zero hurricanes?

https://www.miamiherald.com/news/weathe ... 42700.html
That's why the Florida homeowners insurance market is collapsing now instead of in 2010. The single-state insurance companies built up their reserves during the lull in hurricane activity. Reinsurance was also inexpensive because the reinsurers were using the same hurricane models to price reinsurance.

However, you can only beat the odds for so long. There have been hurricanes in Florida in 5 of the last 6 years, and reinsurance rates are going up.

The large national insurers behaved differently. They'd already had enough of Florida hurricanes, and they didn't trust the hurricane models. This is what I wrote in 2016, the last year of the hurricane-free streak:
talzara wrote: Sat Oct 08, 2016 1:36 pm Florida's insurance market is very different from the other 49 states. No other market is as dominated by local insurers. It's been over 10 years since the last hurricane to make a direct strike on Florida, and the national insurers still haven't returned.
USAA and Progressive are the only large national insurers that operate their national company in Florida. There are also some smaller companies. Single-state subsidiaries in Florida are not pooled with their national companies. For example, State Farm Florida is not in a pool with State Farm Fire and does not have access to its national reserves, except for a reinsurance policy with a coverage limit. If State Farm Florida goes bankrupt, State Farm can just pay out the policy limits and walk away.
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