For the first time in nearly a decade, Florida property insurers have collected more in premiums than they spent on claims, according to a new state report. This comes as no surprise to us Florida property owners who have seen our homeowners insurance premiums skyrocket over the last few years. So, now that insurers are making more money and we have laws that are more insurance company-friendly, can we expect to see lower rates? The answer depends on who you ask.
Citizens Property Insurance Corporation, the state-backed non-profit charged with taking on the customers no other company wants, has announced its intention to increase rates by an average of 14% in 2025. Citizens now insures more Florida property than any other company. In part, this rate increase aims to encourage homeowners to sign up for private insurance, thus reducing the burden and risk to the state.
On the bright side, state insurance regulators are reporting that for-profit companies’ premium rate filings are coming in with an average increase of less than 2% for 2025, which is welcome news for homeowners. This hopeful development has not occurred without conciliation.
After multiple companies went bankrupt in 2021 and 2022, the industry was deemed on life support. In the first part of 2023, through a special legislative session called by Governor Ron DeSantis, several law changes were put into effect that benefited the insurance companies. Laws that allowed for collecting attorney fees were largely discontinued, as well as those allowing a third party, such as a roofing contractor, to collect a settlement without the involvement of the homeowner. Threshold limits were also put in place to permit the suing of an insurer. Proponents of these recent reforms point to the projected 2025 minimal rate increases and the launch of some new insurance companies in the state as a win.
While a minimal increase in 2025 would certainly be a welcome respite, the average insurance premium in Florida remains much higher than the national average. According to Bankrate, the average Florida insurance premium for a $300,000 home is $5,533. This compares to a national average of $2,230 for a home valued at the same amount.
As your homeowner insurance policy comes up for renewal, here are eight things you can do to possibly lower your premiums.
Shop around: Compare quotes from different insurance companies. Prices can vary significantly, so shopping around can help you find a more competitive rate.
Increase your deductible: Opting for a higher deductible means you will pay more out of pocket in the event of a claim, but it can lower your premium because the insurance company assumes less risk.
Bundle policies: Many insurance companies offer discounts if you purchase multiple policies from them, such as combining your homeowners and auto insurance.
Improve home security: Installing security systems, smoke detectors, deadbolt locks, and other safety features can sometimes qualify you for discounts on your insurance premiums.
Maintain a good credit score: In many states, including Florida, insurers may consider your credit score when determining your premium. Maintaining a good one can help you qualify for lower rates.
Review coverage limits: Regularly review your coverage limits to ensure they accurately reflect the current value of your home and your possessions. Adjusting coverage limits can help you avoid overpaying.
Consider wind mitigation features: In Florida, homes with wind mitigation features – such as storm shutters, reinforced roofs, and impact-resistant windows – may qualify for discounts on windstorm insurance premiums.
Ask about discounts: Approach your insurance company to inquire about available discounts.
As always, please do not hesitate to reach out to us with any questions. While we do not sell homeowners insurance, we can help you during the process. We can also be a shoulder to cry on if you just need to vent.
One question we often field is “Why are my rates going up so much?” Homeowners insurance in Florida has become more expensive primarily due to the following factors:
- High risk of natural disasters: Florida is prone to hurricanes, tropical storms, and flooding. These natural disasters can cause significant damage to homes, leading insurers to increase premiums to cover potential losses.
- Cost of reinsurance: Insurance companies themselves purchase reinsurance to protect against catastrophic losses. After major hurricanes or other disasters, the cost of reinsurance can rise, prompting insurers to pass these costs onto homeowners through higher premiums.
- Litigation and claims frequency: Florida has experienced an increase in litigation related to insurance claims, particularly for water damage. This has led insurers to raise rates to cover legal expenses and potential payouts. At one time, the state had 79% of litigation for just 9% of the claims nationwide. The new laws are curbing this and hopefully lowering expenses.
- Building costs: The cost to rebuild or repair homes in Florida has risen over time due to inflation in construction materials and labor costs. Insurers adjust premiums to reflect these increased replacement costs.
- Market dynamics: Insurance rates can also be influenced by broader market conditions, such as changes in interest rates, investment returns, and overall profitability within the insurance industry.
- State regulations: Florida’s regulatory environment can also impact insurance premiums. Regulations may affect how insurers operate and what they are required to cover, which influences their pricing strategies.
Jason Print, CFP®
Co-CEO
