Florida’s Home Insurance Market – After Hurricane Ian

06 Oct

Homeowners in Florida were already dealing with expensive and sometimes difficult to get homeowners insurance before Hurricane Ian hit and unfortunately the storm will most likely make the insurance market even more challenging.  

Many major insurance companies have pulled out of the Florida market altogether which means that most of the insurers in Florida are smaller insurance companies with limited resources who could struggle to cover all the claims related to Hurricane Ian. In fact, six insurers have gone bankrupt already this year, before Ian even hit.

Homeowners in Florida are used to paying high premiums already, according to recent data, Florida residents pay almost three times the national average for coverage. The average premium in Florida is currently $4,231 a year per policy, compared to a US average of $1,544, according to data from the Insurance Information Institute.

While climate change has increased Florida’s vulnerability to severe storms, Florida’s “tort” laws make it easier for insurers to be sued which can help drive up costs dramatically. As an example, in 2021 there were 116,000 insurance lawsuits in Florida related to property claims, and there are already 130,000 in 2022 before Ian hit. Compared to other states this is shocking amount of lawsuits, California for example, only had 3,500 lawsuits in 2021.

Citizens Property Largest Insurer in State Now

As insurers have failed or left the state altogether more and more homeowners have had to move their coverage to state-run Citizens Property Insurance Corp which is the insurer of last resort in Florida. Citizens which was set up to help homeowners who couldn’t find coverage in the private market has seen its policy count soar in recent years. 

Citizens is currently the largest insurer in Florida with 1.1 million, or 13% of the state market. The company’s market share is even larger in some Florida counties. As an example, 39% of policies in Miami-Dade are with Citizens and in Pinellas County, home of St. Petersburg, 27% of its policies are with Citizen’s property.

Citizens is claiming that it has the resources to pay the expected claims for damage from Ian. If they turn out to be wrong and claims exceed Citizens resources, the company will need to issue assessments to all of its customers and if that is not enough, they could assess every insurance customer in the state, regardless of whether they have a policy with Citizens or not. 

One major issue that remains is the solvency of the remaining insurers in the state. If they are unable to cover their claims they could end up in bankruptcy.

When an insurer is declared insolvent, homeowners have their claims turned over to the Florida Insurance Guaranty Association which backs insurance claims the same way the FDIC insures deposits in failed banks. If this happens, Florida residents can expect rates to go even higher. 

Flood damage excluded by homeowner policies

Another issue facing Florida homeowners is the fact that much of the damage from Ian is due to storm surge and flooding. This type of damage is always excluded from a homeowners policy, you must be carrying a flood insurance policy to be protected from flood damage. 

Unfortunately, only 13 percent of the homes in Florida are covered by a flood insurance policy which means many homeowners may be on the hook for most of the repair costs for their homes. 

If you are searching for homeowners or flood insurance in Florida, we can help. We can shop your coverage with multiple insurance companies quickly and easily. Get Florida home insurance quotes today! Or give us a call now to review your rates or coverage options, please call us at 1-888-685-4704, we look forward to helping you.

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