Homeowners Insurance in Florida – More Problems Ahead in the Coming Year

Don’t be fooled by the peace and quiet Florida has enjoyed during the last three hurricane seasons.  There will be plenty of storms in the Florida home insurance market in the coming year.

To begin with more rate increases are on the way.  The state’s largest insurer of last resort will be passing along increases of up to 10% depending on where you live.  Private Florida home insurance companies have been approved for increases ranging from 10-15%.

Those rate increases might not sound alarming to you.  But they are happening during one of the worst economies in our lifetime.  In addition, Florida recently passed Texas with the highest home insurance rates in the nation.  So a 15% increase on a very high premium to begin with could bring you a nasty surprise.  Finally, while these are average rate increases, expect to pay a lot more if you live in South Florida Counties such as Dade, Broward, or Palm Beach.

Florida home insurance policy cancellations will continue to occur during the coming year.  The largest private Florida home insurance company recently received approval to cancel 125,000 policies over the next two years.  Late last year, another national carrier received approval to drop 60,000 policies.  Again, there could be a lot more cancellations in major areas such as Miami, Tampa, and West Palm Beach especially for older homes and homes close to the coast.

Watch for fewer discounts in the coming year.  Fewer discounts could add to the 10-15% rate increase you will already be facing.  Your company could discontinue discounts you’ve been enjoying for being claim free and multi-line insurance discounts.  Last but not least, Florida home insurance companies are concerned about the wind mitigation discounts you get for replacing your roof or installing hurricane shutters.  If they are successful in challenging those discounts in the upcoming session of the Florida legislature, you could end up paying a lot more.

Homeowners insurance companies in Florida are beginning to fail at an alarming rate – especially when you consider that we’ve been hurricane free for the past three years.  Last year three companies failed financially and were taken by the state.  During the past twelve months over half of all the active Florida home insurance companies in the state lost money.  As a consumer you might not care about that.  But you will if these companies don’t have enough money to pay your claim after a major hurricane.

Finding multiple companies willing to cover you is going to continue to be difficult during the coming year.  Besides the fact that the larger companies are continuing to cancel policies, new companies are not being created fast enough to pick up the slack.  The most difficult homes to cover will continue to be old homes, coastal homes, and wood frame homes.  Coverage will also continue to be difficult to get in the sinkhole prone counties of Pasco, Hernando, and Hillsborough.

All of these developments mean that you should expect Florida home insurance to cost more this year while it continues to be hard to find.  Even worse, you could pay high insurance rates and still end up with a company that won’t have the money to pay your next Florida hurricane claim.

Now more than ever, it is essential that you don’t buy Florida home insurance just on price.  If you do, you will have no one to blame but yourself if you have trouble getting paid after the next Florida hurricane.

Michael Letcher is a Fortune 500 senior executive and a licensed CPA.  His on-line buyers guide can help you find low cost Tampa homeowners insurance.  Find out the secrets to low cost Tampa home insurance in his free newsletter at =>


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