The Rising Costs of Homeowners Insurance in Florida: What You Need to Know

August 7, 2023

Florida has incredible weather, beautiful beaches, and a vibrant lifestyle. It's no wonder many people move to Florida or decide it's the perfect destination for their vacation home each year.

But many Florida homeowners have felt some financial pressure recently. High inflation and interest rates are putting a dent in purchasing power, and everything from grocery shopping to paying the electric bill is more expensive.

Another bill continuing to rise is the cost of homeowners insurance in Florida. To get a better understanding of why this is happening and for some things that you can do to reduce costs, read on:

Why Florida's Homeowner's Insurance Costs Are So High

While conditions are often ideal to flock to Florida. Many new homebuyers in the state may not realize the homeowner's insurance costs associated. According to research by the Insurance Information Institute (III), Floridians pay some of the country's highest rates for homeowners insurance—nearly 55% more than the national average of $1,272.

There are a variety of unique factors contributing to the rising costs of homeowners insurance in Florida, including:

  • Weather. While Florida often has beautiful weather, it's prone to powerful storms. As the frequency and intensity of these storms have increased, so too have insurance claims.
  • Risk. Hand in hand with the weather is damage risk. Because Florida sees more storms, there's a higher risk of potential damage from them. As a result, residents in states in higher-risk markets often see higher premiums.
  • Repair costs. Lingering supply chain delays from the pandemic and inflation have contributed to rising construction and repair costs. It costs insurers more to cover claim repairs.
  • Scams. Unfortunately, scams are another contributing factor to rising costs. Some contractors may convince homeowners they have storm damage, file a claim on behalf of the homeowner, then suing the insurer, often leaving the homeowner with higher premiums.
  • Litigation. Florida leads the nation in homeowners insurance litigation. Those court costs, which include insurers paying attorney's fees in successful claims, add more to premiums to help cover those lawsuit fees.

Combined, these factors all mean insurers in Florida must price homeowners' coverage high enough to cover potential claims from storms, damages, and litigation. As a result, homeowners insurance in Florida has been on the rise.

6 Strategies to Help Lower Homeowners Insurance Rates

If you are a first-time homebuyer looking to secure a residential mortgage or a current homeowner who wants to help lower your homeowners' insurance premiums, a few strategies may help.

1. Find a Trusted Insurance Agent

One of the primary strategies for a homeowner is to work with a trusted insurance agent who understands the local market and will account for your financial needs. That way, you can work together to find the right policy coverage that fits your budget while maintaining adequate coverage.

2. Shop Around

Before purchasing your policy or at the end of your renewal period, shop around and compare prices. Start with your current insurer and use their pricing as a baseline to compare rates. You may find a competitor has a better deal.

3. Consider Bundling Policies

As part of the shopping process, ask your current insurer if they offer discounts for bundling policies. For example, many insurers provide more attractive rates to homeowners who also get their car insurance coverage through them.

4. Inspect Your Home Seasonally

Schedule a time before each hurricane season to inspect your home. It may help to create a checklist that includes windows, roof tiles, siding, and nearby trees and branches. Identify areas susceptible to storm damage and consider repairing them to help prevent potential issues later.

5. Be Proactive

If you live in an area of Florida that's more prone to storm or wind damage, consider installing protective features on your home. Your insurer may provide a list of recommendations or offer a discount on your insurance for installing them.

6. Review Your Coverage

Regularly reviewing your homeowners' coverage is important. That way, you can ensure enough coverage to meet your needs and avoid costly surprises if you need to file a claim. If you have more questions, speak with your insurer for additional guidance.

Keep an Eye on Upcoming Legislation

Lawmakers have proposed measures to help reduce rising homeowners insurance costs. The proposed laws cover two of the primary areas that drive insurance costs in the state: legal abuse and assignment of benefits (AOB).

In late 2022, the Florida legislature approved eliminating a law requiring insurers to pay the legal fees of policyholders who won claims. The legislation also eliminated one-way AOB agreement loopholes. AOBs happen when a property owner signs over their insurance claims to a contractor, who then files a claim on the behalf of the policyholder with the insurance company.

AOBs are standard practice in insurance; however, unfortunately this convenience in the unique litigation environment in Florida has served as a catalyst for scams and fraud. This common practice has led contractors to convince Floridians to solicit unnecessary AOBs, conduct expensive work and then filing lawsuits against insurers who ultimately deny or dispute the claims.

It is crucial to be aware of the current situation and worth following this legislation to see how changes may impact your insurance rates moving forward.

Tap Into The Knowledge of Local Experts

City National Bank can help you navigate the process if you're considering purchasing a new home.

Our team of residential mortgage experts live and work in Florida, so they understand the costs associated with buying a home, including homeowners coverage.

You can get a personalized mortgage rate estimate online or reach out to one of our experts with further questions by calling 800-383-4413.

Please note: The content in this article comes from individual opinions and experiences. The content should not be taken as advice coming from City National Bank of Florida. City National Bank of Florida does not offer tax, legal or accounting advice.

Insurance Information Institute (III)

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