How to ease the impact of Florida’s escalating property insurance costs

If you've felt the squeeze of increasing homeowners' insurance rates in the past year, you're not alone.

In an average year, Floridians bear some of the highest rates in the country, investing in a tropical paradise with an extensive coastline of warm beaches and scenic waterfront homes along rivers and canals— areas also susceptible to storm surge and flooding, contingent on prevailing winds.

In addition, strong storms can give rise to tornadoes, and we proudly hold the title of the official lightning capital of the country.The encouraging news is that rates are anticipated to decrease, as affirmed by various insurance industry professionals we consulted. The billions of dollars in losses incurred in September 2022, due to Hurricane Ian, contributed to the current surge in insurance rates. Another factor was the exodus from the Florida market of several insurance companies, driven by excessive litigation costs. This reduced competition has limited the industry's ability to distribute risk across a larger pool of policyholders.

"There is no doubt that we are currently experiencing a tough market for the consumer," said Stephen Connor of Babcock Ranch Insurance, an industry professional with 50 years of experience. Everyone's rates increased, not just those who suffered losses and filed claims. That's the function of insurance—to spread the financial risk among all the policyholders. Otherwise, no one homeowner would be able to afford it.

The rates will decrease, but, due to heavy regulation in the industry, it will take about 18-24 months to see significant changes, he explained.

A substantial change that will gradually contribute to lower rates for property owners is legislation passed in Florida in 2023. The new laws aim to curb costly litigation by directing disputes to arbitration, rather than the courtroom, for customers who believe their insurance company is not fairly compensating their claims. Litigation costs ultimately add to the premiums paid by all policyholders.

The new laws also prohibit predatory, often out-of-state contractors, from taking advantage of homeowners and their insurance companies by having the consumer sign away their rights to the insurance claim before they make repairs. This practice often results in unnecessary extensive repairs that significantly add to the cost of the job.

There are several reasons for the time lag in cost reductions. A state regulating board oversees policy changes and rate changes for each insurer. And insurance companies only make policy changes and rate changes once a year.

Depending on when your policy renews and when your insurance company makes rate changes, you can see your rate go up or down. This is why it may be worth your while to shop around well before your policy year is over. By switching to a new insurer, you could save money if it has not yet increased its rates. By the same measure, you may have to shop your policy the following year at your renewal, when the price increase catches up.

Another reason to shop your policy is to make sure that you are properly insured. The insurance you purchased through your builder may not cover risks you may want to consider, such as water seepage over time and building and ordinance changes. These can be costly and are not routinely covered in Florida homeowner policies.

Typically, insurance covers sudden and accidental occurrences. It is not a home maintenance policy. Another risk not routinely covered is the replacement of lanai screens. A national agent selling insurance from another region of the country over the phone or the internet, for example, may not know what a lanai is, yet alone the need to insure it. They may save you money on your policy, but not cover the things you need.

For these reasons, it could be in your best interests to work through a local agent representing a national insurance company, such as State Farm Insurance agent Mike Martin ([email protected]) or a local independent agent who lives in your area and understands the local risks you face and your Florida lifestyle, such as Chapman Insurance (239-229-8048) or Dynamic Insurance ([email protected]). Independent agents can simultaneously shop your policy with several carriers and give you a range of rates and coverages.

One of the best things homeowners can do to lower their insurance rates is to regularly maintain their property. For example, do not put off roof repair work or replacement. The same is true of window repairs and replacements. Many insurance companies may hesitate to take on or renew a policy for a home that's 10 to 15 years old and in need of maintenance. A wind assessment may be required, which incurs costs and requires scheduling in advance.

If your home is your major asset, it's worth protecting. ¦