It’s a perfect storm (pun fully intended). For property owners in Florida, this “storm” has been brewing for quite some time, and it seems to be gathering steam.
Climate change has accelerated the ferocity and resulting damage of the storms that ravage Florida on a regular basis. Couple that with the high level of insurance litigation in Florida, and you have property owners paying dizzying amounts for insurance … if they can secure it at all.
Insurance carriers are not immune to the pain. In fact, many insurers are limiting where they will provide coverage in the state, or are pulling out all together, like Farmers Insurance has recently announced.
As climate change intensifies and Florida’s population continues to surge, so does the insurance conundrum. Beyond the hurricanes, tropical storms, and historic rain events, questionable legislation related to insurance has increased the cost of claims in the state. For example, the Florida Office of Insurance regulation states that Florida accounts for only 9% of the nation’s homeowners claims but 79% of homeowners insurance lawsuits. Over a 10-year period, 71% of the $51 billion paid by Florida insurers went to attorneys’ fees and public adjusters. In total, these parties have received more claims settlement money than the policyholders received.*
In Florida, if property owners don’t like a claim judgement, they can sue the insurance company, and regardless of the outcome, the insurance company must pay the attorney fees. However, changes may be coming with the passing of House Bill 837, which intends to address predatory attorney practices, excessive damages awarded, and frivolous lawsuits.
In the meantime, what is a current or prospective Florida property owner to do? Thankfully, there are some strategies that can help:
1. Enroll in defense services programs. Insurance carriers often offer programs designed to protect you from specific hazards, such as floods and wildfires. These programs can provide monitoring, prevention, and mitigation services that may reduce your exposure to and/or the impact of an unexpected event. Many insurance carriers will offer these programs free of charge, but clients must proactively enroll.
2. Engage with your insurance agent before buying. By discussing a potential home purchase with your insurance agent, you can better explore your options before it’s too late. It is critical to give adequate time to obtain a quote and/or know the cost of insurance coverage. Discussing the home you want to buy and the policy you are considering will help you make informed decisions and avoid potential issues that might arise from securing inappropriate or insufficient coverage.
3. Request four-point inspection, wind mitigation inspection report, and elevation certificates. The results of these inspections can provide crucial information about the condition and features of a property. Insurers use this information to assess the risk associated with insuring a property. In addition, these evaluations influence policy eligibility and the cost of insurance premiums.
4. Consider the build and renovation years of a property before you buy. When buying, look at the year of construction (newer the better – after 2002 is critical, but better if 2012 or more recent). If the home is older than 2002, ensure that it has been renovated with hurricane protection.
5. Know your flood zone. Flood zone risk assessments specify the flood vulnerability of a home and are used to determine insurance requirements and costs. Ensure the home is constructed above the flood zone with an elevation certificate and is analyzed by an elevation expert before purchasing.
6. Understand your coverage options and how they work together. This includes wind, flood, and all other perils coverage. Evaluate them with your insurance agent to ensure there are no gaps or redundancies.
7. Know the roof replacement year and material. This is critical information for securing insurance coverage. The type of roofing material and when it was last replaced can significantly impact policy premiums and eligibility.
8. Review your HOA agreements. For those in condominium and homeowners associations, review your HOA agreements with your insurance agent to be sure coverages dovetail between personal and association policies.
*Source: Marsh & McLennan Agency Florida Homeowners Insurance Market Update 2023
