Florida homeowners face serious obstacles when it comes to homeowners insurance. Many insurers have reduced their presence in Florida through non-renewals and limited writing of new business.
In addition, 16 companies have voluntarily withdrawn from the state. Those companies include AAA, Bankers Insurance, Centauri Insurance, Lexington Insurance, and more. A further 16 insurers have gone insolvent since 2017. Still, other companies like Liberty Mutual haven’t responded to quote requests for Florida ZIP codes, and Farmers Group has stopped writing new policies statewide.
All this market volatility has left homeowners saddled with higher costs and a tough time finding the coverage they need.
Proprietary data from Insurify reveals that Florida homeowners already pay an average annual insurance premium of $11,759 per year. This is the highest of any state, and rates are likely to rise even more next year.
About 12% of Florida homeowners report their insurance company has dropped their coverage in the last year, according to research from Redfin.1
Numbers fluctuate, but more than a dozen companies either stopped writing new policies in the state, reduced their risk exposure by not renewing existing policies, or began the process of voluntarily withdrawing from the market, including:
Farmers Insurance: Citing the need to manage its risk exposure, Farmers Group will begin non-renewing Farmers-branded home, auto, and umbrella policies managed by its captive agents. But 70% of Farmers Group Florida business will remain through its subsidiaries represented by independent agents. 2
Progressive: The insurer is discontinuing some coverages and non-renewing policies for high-risk homes, but will still have a significant presence in the state.3
Bankers Insurance: In July 2022, several months prior to a special legislative session to address insurance market issues, the company announced that it would voluntarily withdraw from the state’s home insurance market, citing failure by lawmakers to take decisive action to reduce fraud and lawsuits.4
Lexington Insurance: An AIG subsidiary that specialized in insuring high-value homes with $1 million-plus dwelling coverage limits, Lexington began to withdraw from Florida and other states in 2022.
AAA: The insurer is opting not to renew some “higher-exposure” policies to reduce cost.5
Heritage Insurance: Heritage non-renewed 74,000 Florida home policies over the past year as it focuses on reducing its home insurance risk while growing its commercial residential (master condo association policies) book of business in the state.
Seven companies have been liquidated since January 2022, according to the Florida Insurance Guaranty Association.7 The Florida Office of Insurance Regulation lists 12 companies currently in some stage of receivership.8 Their policies have been canceled, leaving homeowners scrambling to find new coverage.
Most of the displaced policyholders have landed with Citizens Property Insurance Corp., the state-backed insurer of last resort. Citizens is now the largest home insurer in Florida, with more than 1.2 million customers.
Multiple factors have led to Florida’s homeowners insurance crisis, and industry observers say it’s been decades in the making. Insurance claim fraud, frivolous lawsuits, severe weather events, including Hurricanes Ian and Nicole in 2022, and inflation have all driven up insurance companies’ costs. These expenses have then been passed on to consumers.
Now, the dwindling number of insurers leaves consumers competing for coverage, which drives prices up even more.
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From 2020–2022, Florida suffered 15 billion-dollar weather and climate disasters, totaling $100–$200 billion. It has also suffered five severe weather events totaling nearly $15 billion more in 2023 so far, including Hurricane Idalia in August.12
Most experts expect risk factors to continue to escalate in Florida. In fact, the frequency and expense of weather and climate disasters in the United States is increasing. This is due to increased exposure (value of at-risk assets), vulnerability (intensity in a given location), more people living in harm’s way (population shifts to coastal areas), and increasing frequency of some types of extreme weather due to climate change, according to the National Oceanic and Atmospheric Administration’s Climate.gov website.
And risks extend beyond hurricane season. For instance, some counties in Florida are at heightened risk of having structures destroyed by wildfires due to warmer temperatures, the First Street Foundation reported. And non-tropical flood events are also a year-round risk in Florida. For example, April 2023 saw an historic rainstorm pour 2 feet of rain on Broward County in 24 hours.
The dwindling number of insurance companies writing policies in Florida has made it difficult for homeowners to find coverage through private insurance. The situation is so dire that Citizens Property Insurance Corporation, Florida’s insurer of last resort, is now the biggest insurer in the state, according to “The 9th Annual National Risk Assessment” from First Street Foundation.13
Premiums from Citizens are 37.5% below the private market average, Citizens CEO and president Tim Cerio told WINK News. But the state is bringing in new private insurers and requiring homeowners to make a switch at renewal time if the private company offers a premium up to 20% more expensive than the Citizens renewal rate.
Such a move might be necessary because Citizens lacks the reserves to pay claims for a major hurricane. But the law allows Citizens to collect an emergency surcharge on homes — not only on the homeowners it insures, but on non-Citizens policyholders, too. What’s more, state regulators approved an average rate hike of 11.5% for Citizens.14
While Florida generates less than 10% of homeowners insurance claims, 79% of homeowners insurance lawsuits are filed here, according to the Insurance Information Institute (Triple-I).10
In 2017, the Florida Supreme Court ruled that in suits against insurance companies, courts could award plaintiffs’ attorneys up to 2.5 times their hourly billing rate when courts ruled in the plaintiffs’ favor. This means even simple lawsuits can rack up hundreds of thousands of dollars in attorney fees, the III noted.
Exacerbating the lawsuit issue is “legalized fraud,” in Triple-I’s words. Claims adjusters might catch contractors who inflate the cost of repairing damage and ask policyholders to assign over their benefits. When the insurer reduces or denies the claim, the contractor sues in the hope that the insurance company will settle rather than risk having to pay exorbitant legal costs if a judge rules against it.
Legislators passed a reform bill in December 2022 to end one-way attorney fees, the prime generator of frivolous lawsuits, and to eliminate assignment of benefits for home policies, hoping to reduce contractor fraud schemes.11 Insurers are starting to report a decline in lawsuits due to the reform package, according to Triple-I.
For two decades, nationwide insurance premiums have risen faster than inflation, according to a November 2023 research brief from the Insurance Research Council. Contributing factors include natural disasters, increasing home-repair costs, supply chain disruptions, and migration of populations into disaster-prone areas, the IRC noted.
Florida ranked second among the least affordable states. In 2020, household expenditures on homeowners insurance reached 3.79% of the state’s median income. Compare that to the least expensive state, Utah, where insurance premiums were 0.92% of the median income.
The insurance fraud contributing to Florida’s insurance crisis takes many forms. In one recent example, people posing as licensed public adjusters and a mold remediation company owner filed claims on behalf of an unwitting homeowner for non-existent water and mold damage from an air conditioning unit.9
Roof scams are also common. Unscrupulous contractors go door-to-door offering free roof inspections, lie about finding storm damage, and then promise homeowners a free roof with no deductible if they assign their benefits to the contractor. This allows the contractor to be paid directly by the insurance company. Some shady contractors have even been caught intentionally damaging roofs to justify claims.
In other cases, damages are real, but the repair costs are grossly inflated by contractors who might ask the homeowner to assign them their benefits. Rather than risk being sued, the insurers sometimes settle out of court to avoid a drawn-out legal battle that would rack up high expenses, regardless of the validity of the claim.
Florida’s state government has taken a number of actions to address the insurance crisis. So far in 2024, the Florida Legislature has enacted:
House Bill 293: Requires “homeowners’ association boards or committees develop hurricane protection specifications for structures within the association.”
House Bill 989: States that eligible surplus line insurance companies must respond to any consumer complaints within 14 days of the complaint. Insurers must also provide the state’s department of insurance with an email address to send complaints to.
House Bill 1029: Allocates $30 million for grants for grants and inspections to help condo associations mitigate hurricane damage.
House Bill 1503: Allows surplus lines insurance companies to take out policies from Citizens Insurance Corporation, provided they meet necessary qualifications. “These policies are for dwellings that are not primary residences or homestead properties.”
House Bill 1611: “Prohibits surplus lines insurance companies from canceling or non-renewing personal or commercial residential property insurance policies that cover a dwelling or a residential property that sustained damages in a hurricane for 90 days after the dwelling or residential property has been repaired.”
House Bill 7073: Requires insurance companies to grant a 1.75% deduction to the total premium for all homeowner and flood insurance policies. This deduction only applies to policies with an effective date between Oct. 1, 2024, and Sept. 30, 2025.
Insurify’s 2023 home insurance report forecasts a 9% nationwide rate increase in 2023 as a result of the same key factors driving up rates in Florida, including climate-exacerbated natural disasters, inflation, and increased fire risk, for example.
Florida Gov. Ron DeSantis and state lawmakers have enacted legislation addressing the crisis, but as the Miami Herald reported, the efforts thus far have been geared toward stabilizing the insurance industry, not reducing rates.
In April, Florida regulators approved eight new property insurers to write business in Florida in order to promote market stability. Additionally, Citizens is working to move policies to private insurers through its depopulation program. In June, the Citizens Board of Governors unanimously supported a proposal to increase rates by 14%, bringing them in line with rates offered by private insurers in hopes of urging more people to leave Citizens for the private market.
Navigating Florida’s home insurance crisis can be an exercise in frustration for homeowners. But the more you know, the better prepared you’ll be to find a workable solution for protecting your home.
The state-backed Citizens Property Insurance Corporation currently insures more homes than any other insurer in the state — more than 1.2 million policies as of December 2023. Citizens is Florida’s insurer of last resort — it’s for residents unable to find coverage from a private company. Its rates are comparatively low but on the rise.
Over the past two years, more than a dozen Florida property insurers have either stopped writing new business, reduced their risk by non-renewing policies, or implemented a voluntary withdrawal from the state. In addition, seven companies have become insolvent since February 2022, and their policyholders have had to find new coverage, either with Citizens or a private insurer.
If your insurance company stops writing policies in your state, there’s nothing you can do except seek insurance elsewhere. But Florida insurer Del Toro Insurance notes on its blog that implementing wind mitigation recommendations, paying premiums on time, and completing repairs, especially to your roof, can help reduce your risk of non-renewal.
The Consumer Financial Protection Bureau has several suggestions for consumers whose insurance has been canceled. First, ask your insurer to reconsider. If it won’t, shop around for new coverage. If you’re unable to find it, you can get insurance through Citizens Property Insurance as a last resort. Inform your mortgage lender of the change to avoid potentially expensive force-placed insurance.
Six new property insurers will begin offering home coverage in Florida in 2024, providing Florida consumers an opportunity to comparison shop for coverage and get competitive quotes, which will hopefully lead to better pricing, according to Triple-I.
Insurify data forecasts a 7% increase to home insurance rates in Florida. This places the average Florida home insurance policy at $11,759 per year, the highest in the nation.
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