Florida is known for attracting many people due to its sunny climate, but recently many have started to move from this state. It’s not the residents of Florida that are leaving however, it’s home insurance companies. Many Florida homeowners are currently struggling to find coverage for their property as policies are becoming more and more expensive and include fewer protections. This article will examine why property insurance in Florida is so high and the main reasons insurance companies are going insolvent in Florida.
Why are Insurance Companies in Florida in Financial Trouble?
Florida has always been a complex place for insurers to provide home insurance, but why are they currently facing financial troubles? Lawsuits and fraud appear to be the most likely culprits. In 2021, more than 100,000 lawsuits were filed for property claims in Florida which is 130 times more than any other state in America. Roof scams, in particular, have driven up the cost of homeowners insurance. One of the most common scams includes “roofers” targeting particular neighborhoods and unsuspecting homeowners by offering an inspection of their roof where they “find” a problem.
The homeowner is then pressured to sign an assignment of benefits form, which gives the contractors the right to file an insurance claim on their behalf. The claims adjuster inspects the property and finds little to no damage, but the “contractor” will file a suit against the insurance company demanding a payout. The insurance company then has to pay legal fees to fight the lawsuit or settle out of court. In either scenario, the insurance company loses money.
While some larger insurance companies remain in Florida, they have become extremely wary of insuring roofs. So instead of insuring the roof on a home, no matter how old the roof is, many insurers are now only underwriting roofs that are ten years old or less. This is to try and reduce the chances of getting scammed.
Why Is Property Insurance So High in Florida?
As mentioned earlier, Florida has always been a tricky state for home insurance providers. Due to its shape and geographic location, Florida is very vulnerable to hurricanes and tropical storms. Even homes in the state’s interior aren’t well protected when bad weather happens.
Unfortunately, hurricanes and other high-intensity storms are likely to happen more frequently due to changing weather patterns. Colorado State University predicts that the 2022 hurricane season will be more severe than usual, with 19 named storms, four of which are predicted to be “major”. If those storms do make landfall, it could make the home insurance market in Florida even more fragile and potentially collapse. The rates of insurance are expected to double or triple in the next year.
Solving the Florida Insurance Market Crisis
In July of 2021, Florida Senate Bill 76 went into effect, which included several measures to help curb fraudulent claims against insurers. For example, one provision is targeted at reducing how fraudulent contractors solicit homeowners at the start of the scam.
If you live in Florida, you may want to consider having a plan to help lessen your risk of getting an insurance non-renewal. While you can’t prevent your home insurance provider from pulling out of the state, you can take some steps to make your home as desirable as possible for insurance providers:
- Install wind mitigation features such as hurricane straps or other roof-bracing measures.
- Keep your roof updated and in good shape. If you can afford it, replace your shingle of flat roof before it reaches 10 years of age to lessen the risk of nonrenewal, and replace tile roof prior to 20 years.
- Maintain your property by checking the rest of the exterior regularly. Ensure there are no large tree branches or other hazards overhanging your home.
- Insurance is not to help maintain your home, it is there for accidents and emergencies. Homeowners are expected to replace their water heaters regularly, electrical panels over 30 years should be looked at by an electrician.
If you’re concerned about insuring your property in Florida and want to speak to a professional insurance agent you can trust and depend on, get in touch with Dunham Insurance Services. At Dunham Insurance, no matter what type of insurance coverage you need, we take the extra time to make sure that you completely understand your coverage and that it fits your needs perfectly. Contact us today to get a rate quote!