Why is Florida homeowners insurance so expensive?

22 Sep

Homeowner insurance premiums are dramatically heading up this year, particularly in states that are prone to natural disasters. According to a new report from Policygenius, the average homeowner policy went up 21% nationally which is on top of a 12% increase that homeowners endured last year. 

As usual, Florida is at the top of the list when it comes the most expensive homeowners premiums in the country as well as the largest premium increase last year. Residents of the Sunshine State, saw a 68% increase which is almost double the nationwide increase of 35%.

The Florida insurance market has been suffering for years due to hurricanes and severe weather as well as fraud related to roofing claims. While legislators have made some progress to help solve the fraud issues, it may be years before the new legislation actually impacts premiums. 

Adding to the pain in Florida is the fact that nine insurance companies have gone under since January 2021 and other major insurers (Farmers for example) have stopped writing policies in the state altogether which makes homeowners insurance more expensive and offers residents less choice. Citizens Property, the insurer of last resort in Florida is currently the largest homeowner insurance company in the state.

When it comes to rapidly rising insurance premiums, states that are prone to tornadoes, hurricanes and wildfires are seeing the largest premium increases over the last two years. 

The following states saw the biggest increases in homeowners insurance from May 2021 to May 2023 according to the Policygenius report:

  • Florida: 68% increase with average premium going from $1,127 to $1,896
  • New Mexico: 47% increase with average premium going from $855 to $1,255
  • Colorado: 46% increase with average premium going from $1,390 to $2,031
  • Idaho: 46% increase with average premium going from $552 to $804
  • Texas: 46% increase with average premium going from $1,471 to $2,141

The report puts the blame for higher premiums on increasing climate disasters, longer wildfire seasons, “record-high insurance industry losses”, as well as higher construction prices. 

Recent natural disasters in some states on the list, Florida for example, have helped push up the cost of insurance. In addition to hurricanes striking Florida, other states on the list have had to deal with natural disasters of their own. Colorado and New Mexico recently suffered massive wildfires that have pushed up insurance costs. 

Much like Florida, states that are experiencing wildfires have seen not only seen premium increases, but they have also seen insurance companies leaving the state altogether or no longer selling homeowners insurance policies. In certain areas of California, homeowners struggle to find coverage as insurers are reluctant to write policies in areas where wildfires have become more common.

“While most home insurance providers have raised premiums or reduced coverage in high-risk areas to remain profitable, others have gone out of business completely due to the turbulent market,” the report stated.

If you live in one of the areas that have seen massive increases in homeowners insurance costs, one of the best ways to lower your coverage costs is to shop your policy. Gather quotes from at least five national insurers and make sure you are comparing apples to apples when it comes to coverage levels and deductibles. 

Tags: , , ,