Sunshine, beaches, and trading snow for sand have long been reasons to relocate to Florida. Whether it is “snowbirds” who live there just during the winter months or new full-time residents, one of the biggest surprises for new Florida homeowners is the cost of homeowners insurance. Florida has some of the nation’s highest homeowners insurance premiums. Why are Florida’s home insurance premiums so high?
Is homeowners insurance required in Florida?
While it’s true that homeowners are not required to insure their homes in Florida, the catch is that if you borrow money to buy your home, lenders will likely require you to have insurance. So, if you have a mortgage, you’ll likely still need to buy homeowners insurance.
Even if you purchase your home outright and don’t have a mortgage, homeowners insurance is still a good idea. That’s because your home is probably the most expensive investment you’ll make—so protecting it against loss is a sound financial decision.
How much is homeowners insurance in Florida?
Forbes estimates that the average annual premium for homeowners insurance in Florida is $2,030 a year to insure a house with $350,000 in dwelling coverage. Florida is the most expensive state in the nation in which to purchase homeowners insurance policy. There are a number of reasons for this.
Why is homeowners insurance in Florida so expensive?
According to U.S. census estimates, Florida is one of the fastest-growing states in the country. Many of those relocating to Florida for its sunshine and moderate cost of living are sometimes shocked by their insurance bills, leaving some to ask, “Why is homeowners insurance in Florida so expensive?”
Many factors impact the cost of homeowners insurance. Some have to do with damage risk from natural disasters such as hurricanes and flooding. With Florida’s location, long coastline, and the risk of both Atlantic and Gulf hurricanes, the potential for strong storms means insurance costs will be higher.
But it’s not just hurricanes that have Florida homeowners paying high premiums. Two other frequently cited causes of higher homeowners insurance costs in Florida are litigation and fraud. The Insurance Information Institute (III) cites these twin factors as the leading causes of Florida’s homeowners insurance crisis.
Floridians file about nine percent of the homeowners’ insurance claims in the country. Still, the state accounts for an astonishing 79 percent of the country’s homeowner claims lawsuits, according to a news release issued by the governor’s office.
Fraud is another contributing factor to high insurance costs, and a major culprit is roofing scams that take advantage of some holes in Florida laws.
A typical profile of one of these scams goes like this: after a storm, someone claiming to be a contractor knocks on doors, offering to conduct a free inspection of a homeowner’s roof to assess if there’s been any storm damage. When indications of storm damage are inevitably found, the contractor offers to assist the homeowner in getting their insurance to cover the roof replacement work—asking the homeowner to sign a form at this point.
What the homeowner has likely signed is what is known as an Assignment of Benefit (AOB) form, which transfers the right to receive payment to the contractor instead of the homeowner. The contractor files the often -fraudulent claim, the insurance company denies the claim, and the contractor then sues the insurer. All of these false claims and lawsuit filings add up: and consumers are the ones who end up paying when insurance costs rise.
The factors listed above have led dozens of insurance companies to exit the market in Florida, and three filed for bankruptcy. This too contributes to high prices, as fewer national insurers remain in place—and with less choice, there’s less competition. Homeowners in Florida have limited options for homeowners insurance policies, and what is available is very expensive.
This is why the Florida homeowners insurance crisis is serious and widespread.
Are there other differences in homeowners insurance in Florida?
The issues covered above have changed the homeowners insurance market in Florida dramatically. A number of large, national insurers no longer offer homeowners insurance in Florida, leaving smaller in-state insurance companies and a state-run insurer of last resort pool called Citizens Property Insurance to cover homeowner policies.
In Florida, hurricane/windstorm insurance is required to be part of your homeowners insurance policy. This is different than some other states prone to hurricanes, where homeowners are required to purchase separate coverage.
What is different about Florida is that the state has the most homes covered by the National Flood Insurance Program, a federally administered flood insurance program operated by FEMA. Even with the highest number of NFIP policies, only about 13 percent of homes in Florida are covered by flood insurance—despite the risks. And, like just about everywhere else, flood insurance is not included in standard homeowners insurance policies in Florida.
All of these factors together mean that insuring a home in Florida will likely be very different than a homeowner’s experience in another state. There are fewer options, and you might not be able to stick with the insurance company with which you previously had homeowners coverage.
This means that finding Florida homeowners insurance quotes can take a bit of time, as most of the big names everyone is used to hearing might not offer policies—and finding those smaller, state-specific companies requires research.
Where can I get a quote for homeowners insurance?
You can turn to the trusted experts at Guaranteed Rate Insurance to get quotes and answers to any questions you might have about homeowners insurance policies. Our licensed Florida agents have extensive experience in this market and specialize in coastal areas and high-risk policies. They’ll work with you to find the right policy to protect your home and property in Florida. Get a quote or talk to an agent to get started today.
Disclaimer:
*Savings, if any, vary based on the consumer’s profile and other factors. Contact your insurance agent for more information. Restrictions apply.
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