Why are my Florida homeowners insurance premiums increasing?

Are you concerned about your Florida homeowners insurance rates? Earlier in the year, insurance companies across the state petitioned the Florida Office of Insurance Regulation for insurance rate hikes between 20 and 40 percent, according to Insurance Journal. The rate increase requests are due to the rising costs that insurance companies are experiencing due to increased storms and storm damage, but a variety of factors have contributed to the extremely high insurance rate increases.

Florida Gives Homeowners Three Years to File a Claim

You’ve probably always heard that you should file a claim as soon as possible after your home or property has been damaged after a covered event. For most people, this means they file within a few days to a few weeks after experiencing the damage.

However, Homeowners in Florida have three years to file a claim after a covered event. This means that claim filing for certain events can be filed for up to 36 months. Initial claims can also be amended and homeowners can file supplemental claims. This is causing a loss creep for insurance companies.

An Increase in Florida Hurricane Activity and Hurricane Claims

From 2007 to 2017, Florida experienced very few major hurricanes and named storms. Then, Hurricane Irma ran straight up the center of Florida and caused 11 billion dollars in damage. In 2018, Florida was hit by Hurricane Michael, which caused an additional 7 billion dollars in damage. Due to Florida’s general timeframes for filing claims, homeowners could still be filing claims for those two hurricanes. The bad news is that 2020 is also supposed to be an active hurricane season, which means another storm could result in billions more in homeowners and flood insurance claims.

Increase in Lawsuits by Attorneys

Lawsuits increase an insurance carrier’s litigation costs as they try to settle the claim. The lawyer could be hired by the homeowner in order to reverse a denial or attempt to get a higher payout, or they could be hired by the contractors who have agreed to repair the homeowner’s home and handle all the necessary paperwork with the insurance company. The problem is that lawyers can request up to three times their hourly rate when working on an insurance claim. As a result, the claim costs are much higher when a lawyer gets involved in the claim.

A Hard Insurance Market in Florida

When we talk about a hard insurance market, we are talking about a market where insurance carriers leave due to high costs and the potential to have extreme losses on the insurance side. In other words, the claim costs are estimated to be higher than the collected premiums over a period of time. This leads to insurance carriers leaving the market, stricter controls on insurance underwriting and higher premiums due to increased costs and a lack of competition. It is believed that Florida could enter a hard market in the near future.

Understanding How Bad the Florida Rate Hikes Could Get

With the increase in hurricane and major storm damage across Florida, it is estimated that Florida homeowners could see rates increase as much as 15 percent annually for the next three to five years. Insurance companies may also refuse to insure homes that have not been well-maintained. For example, if your roof is deemed old by the insurance carrier, you may have to replace it first before they will agree to issue you a homeowners insurance policy.

The bad news is that 2020 is also supposed to be an active hurricane season, which means another storm could result in billions more in homeowners and flood insurance claims, and insurance companies may already be hedging their bets. According to an article by the Miami Herald, some insurance companies have removed themselves from entire zip codes, and those that are still in the market have asked for rate increases of between 5.5 and 12.4 percent.

Florida Homeowners Insurance with Fearnow

At Fearnow, our insurance agents always strive to get you the best and fairest homeowners insurance rates in Florida so that you can feel confident that you are protected against a covered event. Our homeowners insurance policies cover your home, personal property, liability protection for bodily injury that could happen to other people on your property and living expenses coverage if you cannot live in your home after a covered event. You can even tailor the coverage amounts to suit your needs.

To learn more about our homeowners insurance coverage in Florida, give us a call at 813-544-7649.