Even though we’ve had quiet hurricane seasons in Florida during the past three years, there are problems in the coming year ahead.
To begin with more rate increases are on the way. Depending on where you live, you will be facing increases of up to 10% from Florida’s largest insurance company of last resort. Private Florida homeowners insurance companies have received rate increases in the range of 10-15%.
Those rate increases might not sound alarming to you. But they are happening during one of the worst economies in our lifetime. In addition, Florida recently passed Texas with the highest home insurance rates in the nation. So a 15% increase could be a very nasty surprise on top of an annual premium that is already high to begin with. Finally, while these are average rate increases, expect to pay a lot more if you live in South Florida Counties such as Dade, Broward, or Palm Beach.
Homeowner insurance policy cancellations will continue to occur in Florida during the coming year. The largest private Florida home insurance company recently received approval to cancel 125,000 policies over the next two years. Late last year, another national carrier received approval to drop 60,000 policies. Again, there could be a lot more cancellations in major areas such as Miami, Tampa, and West Palm Beach especially for older homes and homes close to the coast.
Watch for fewer discounts in the coming year. Fewer discounts will add to the 10-15% rate increases that have already been approved. Your company could discontinue discounts you’ve been enjoying for being claim free and multi-line insurance discounts. Finally, homeowners insurance companies in Florida are focused on the amount of wind mitigation discounts you receive for installing a new roof or hurricane shutters. If they are successful in challenging those discounts in the upcoming session of the Florida legislature, you could end up paying a lot more.
Florida home insurance companies are starting to fail at an alarming rate – especially since there have not been any hurricanes in the last three years. In the last twelve months, three companies ran out of money and were taken over by the state. In the last year, over 50% of all active homeowners insurance companies in Florida lost money. As a policyholder, you probably could care less about that. But you will if these companies don’t have enough money to pay your claim after a major hurricane.
Finding multiple companies willing to cover you is going to continue to be difficult during the coming year. Besides the fact that the larger companies are continuing to cancel policies, new companies are not being created fast enough to pick up the slack. The hardest homes to find coverage for are older homes, coastal homes, and wood frame homes. It will also be difficult to get coverage in the sinkhole prone counties of Pasco, Hernando, and Hillsborough.
All of these developments mean that you should expect Florida home insurance to cost more this year while it continues to be hard to find. Even worse, you could pay high insurance rates and still end up with a company that won’t have the money to pay your next Florida hurricane claim.
Now more than ever, it is essential that you don’t buy Florida home insurance just on price. If you do, the only one you can blame if you don’t get paid after the next Florida hurricane is yourself.