Why is property insurance so high in Florida?
Many homeowners across the state are dealing with canceled insurance policies or steep premium hikes. Additionally, the current insurance crisis in Florida is also affecting people who are trying to buy or sell real estate.
To make matters worse, there are fewer options for home insurance compared to just a few years ago. And in South Florida counties like Broward and Dade, state-owned Citizens Property is the only option for homeowners trying to obtain a new policy on an older home (30+ years old). The Florida Office of Insurance Regulation (OIR) tracks when insurance companies discontinue operations in the state. Below are some startling statics obtained from the Florida OIR:
- 7 property insurers discontinued operations in Florida in 2017.
- 9 property insurers discontinued operations in Florida in 2018.
- 10 property insurers discontinued operations in Florida in 2019.
Since 2017, six property and casualty companies that offered homeowners insurance in Florida liquidated. Three more are in the liquidation process in 2022.
The biggest issue in Florida is home insurance fraud, driven by fraudulent roofing claims. A recent proclamation from the office of Governor Ron DeSantis notes that, although Florida only accounts for 9% of the country’s home insurance claims, it is home to 79% of the country’s home insurance lawsuits.
A property insurance law went into effect in 2021 that supporters said would help, but homeowners across the state are still getting dropped from their policies or paying much more for their coverage.
Strategies to save on your Florida homeowners insurance
Living here in the Sunshine State can have its advantages, but cheap property insurance is definitely not one of them.
Our tropical climate breeds everything from hurricanes to tropical storms to significant hail storms & tornados just to name a few and you can not forget about our lightning.
While homeowner’s coverage can be costly in our state, there are ways you can spend less on your Florida homeowner’s insurance.
Understand the relationship between property value and replacement cost
What you paid for your home has no impact on what you need to insure your home for. The sales price of your home includes land and land can not be insured for fire, wind, theft, etc.
Additionally, the market value can be based upon location, age and how strong or weak the market is. That is why it is very important that you insure your home for the replacement cost value of your home or what it would cost to rebuild your home brand-new with current building codes and materials. Insuring your house for more than replacement cost is unnecessary and will increase your premium.
Reinforce your home and to make it catastrophe resistant
Investments such as adding storm shutters, reinforcing the roofing and updating your utilities can decrease insurance costs. These type of improvements can help decrease the risk for fire and water damage.
In addition, given that Florida is a hurricane prone state, Florida requires companies to offer discounts through wind-mitigation improvements. Discounts are available for the following safety features:
- Roof Bracing of Gable End Roof Deck Attachment
- Roof Covering
- Roof-to-Wall Connections
- Secondary Water Resistance
- Doors
- Protection of Openings (windows and other openings)
The initial costs for adding a few of these features can be high, but the long-term financial investment can decrease your Florida homeowner’s insurance coverage costs and make your home safer.
If your house presently has any of these features you may need to have a home wind-mitigation examination completed to submit to your insurance agent or company to add the additional discounts.
Increase Your Claim Deductible
Many providers in Florida offer deductible beginning at $1000, however some still offer lower deductibles (e.g. $500). Increasing your deductibles will help lower your premium. Homeowner’s insurance coverage premiums may be on the rise in Florida, however there are still ways you can help reduce your premium.
Understanding your options is the first step to saving money on your homeowners insurance coverage.
American Traditions has insured homes in the state of Florida since 2006, give us a try to see if we can lower your rates.
Seek out any other available discounts
Insurance Companies might offer additional internal discounts. Not every company offers the exact same discounts and these type of discounts will vary by company if available.
These discounts might include:
- Discounts for seniors or Retirees
- Gated Community Discounts
- Accredited Builder Discounts
- Newer Roof Discounts
- Companion Policy Discounts
- Electronic Policy Distribution Discounts
Your local agent should review these with you, but it is also a good idea to evaluate your quote and ask if any extra discounts are available.
Consider the impact on your policy prior to making claims
Claims can increase your premium, there don’t use your homeowners insurance coverage like a home warranty plan. The best bet is to think prior to putting in claim. If it is a small claim that you can pay out of pocket, the savings in the long run might pay for the repair work itself. Furthermore, if you decide to put in a claim, consult your insurance company prior to signing any contracts with any third party vendors that might increase your claims cost overall.
Your homeowner’s policy is there for when the big claims take place and if you start to place a lot of small claims, your company might consider your home high risk and may raise your rate or even cancel your policy.
Keep an excellent credit score
Many insurance companies reward a favorable credit history with extra discounts, thus lowering your homeowner’s insurance premium. Therefore, establishing a great credit history can cut your insurance coverage costs. Many customers do not realize that credit is a factor in how insurance providers evaluate you. This is because insurers have found that policyholders with poor credit tend to make more claims.
If you found this post useful, please check out other blog posts (e.g. Who Gets My Home Equity If The Bank Forecloses?) for additional content.