Understanding Florida’s Homeowners Insurance Crisis

November 15, 2023


Understanding Florida’s Homeowners Insurance Crisis
After Hurricane Ian wreaked havoc on the Gulf Coast to a staggering $17.27 billion in claims, industry experts predicted that many of the state’s resident insurance companies could struggle to recover.

In the aftermath of Ian, there were a staggering 521,819 residential property claims reported by insurers to the Florida Office of Insurance Regulation.

The real culprits behind the homeowners insurance crisis have been building up over the years, including excessive lawsuits, private companies leaving the state, the rising costs of reinsurance, high labor and material expenses for home repairs, supply chain issues, and more. 

Florida has less than 10% of claims and over 80% of insurance litigations. Where hurricanes are an act of God, legalized fraud can be blamed on the state’s failure to act.

To compound matters, last year the Florida Office of Insurance Regulation placed 27 companies on a watchlist due to concerns over potential financial stability. Renowned as the most hurricane-prone state in the nation, Florida’s property insurance market has now reached a new level of concern. According to a spokesperson for the Insurance Information Institute, the crisis is partly man-made and largely amplified by frivolous lawsuits and fraudulent insurance claims.

Non-renewal notice differs from cancellation...

There is a difference when it comes to non-renewal notices and cancellations of homeowners insurance policies. Florida has strict regulations that must be followed before an insurer can cancel your policy. Once a policy has been in place for a specified period, it can only be cancelled (also called rescission) for specific reasons. This could be because you’re behind on payments, the property has fallen into disrepair, or incorrect information appeared on your loan application.

A notice of non-renewal does not mean the homeowner did anything wrong. Since insurance companies move in-and-out of markets for numerous reasons, the policyholder and the insurer have the right to decide whether to renew the coverage (or not) whenever a policy term comes to an end. A non-renewal notice is typically sent to the customer 90 days before their homeowners policy would need to be renewed.

Popular Home Insurers in the Sunshine State

The purpose of your home insurance policies is to protect your property and assets. But, Florida homeowners are facing a major crisis with skyrocketing premiums and limited coverage options. The high rate of insurer bankruptcies, unfavorable legal statutes, and difficulty in raising premiums have caused many carriers to pull out of the Sunshine State. Unfortunately, the cost of claims is typically passed on to consumers. 

Popular home insurers are discussed below:

AAA Home Insurance – Florida-based insurance provider AAA has confirmed it is committed to the state and is not leaving. However, the Triple A has said it will not be renewing a small percentage of homeowners insurance policies due to an unprecedented rise in reinsurance rates following the destructive 2022 hurricane season. Despite its attempt to reduce its risk exposure, AAA does plan to grow the company’s policy count and is actively writing new home insurance policies.

Citizens Property Insurance – Citizens Property Insurance was created in 2002 as a state-backed provider of homeowners insurance policies. Citizens serves as a crucial last-resort option when a homeowner becomes unable to find adequate property coverage in the private market. Since Citizens is a non-profit carrier and run by the state of Florida, customers do not have to worry about its ability to pay out claims. A hurricane deductible amount specifies the amount to be exceeded before Citizens pays for damages.

Farmers Insurance – During the summer, Farmers Insurance announced it would ending its home-and-auto umbrella coverage as it considers the Sunshine State to be at particular risk due to the devastating hurricanes and tropical storms that routinely batter its coasts. AIG had similarly announced it would not write new policies for homeowners along Florida’s coastline. Farmers labelled its change of direction as necessary to effectively manage the carrier’s risk exposure for property casualty damage.

Geico Home Insurance – Although Geico offers homeowners insurance in every state, the company’s website includes a note that Florida is considered to be a limited market for home insurance. Geico home insurance policies are underwritten through third party insurers, so you will not know which company is insuring your home until you get a quote. Geico partners with dozens of major insurance companies, including Chubb, Homesite, Liberty Mutual and Travelers.

Progressive Home Insurance – As one of the state’s largest insurers, Progressive recently announced that it has no plans of leaving Florida. However, the company has indicated that it plans to send out non-renewal notices to roughly half of its policyholders. According to the Insurance Information Institute, Progressive will non-renew an estimated 47,000 DP3 policies and 53,000 high-risk property policies. DP3 policies cover homes that are not a primary residence but are rented out.

Universal Insurance Holdings – Universal Insurance Holdings is a publicly- traded holding company that offered property and casualty insurance as well as value-added insurance services. Universal Property & Casualty (UPC), a wholly owned subsidiary of Universal Insurance Holdings, had been one of the leading writers of homeowners insurance in Florida. Continuing the trend of instability in the state’s insurance market, UPC was the seventh private insurance company to exit Florida last year.

State Farm Insurance – It was recently announced that State Farm is now the Sunshine State’s second largest home insurance provider. In fact, Governor Ron DeSantis’ office confirmed that State Farm Insurance has plans to continue its substantial presence as a good neighbor in Florida’s volatile marketplace. Moreover, the state legislature is being pushed to enact insurance reforms, such as changing the way litigation takes place when a home insurance claims dispute happens.

Tower Hill Insurance – Tower Hill Insurance Exchange has provided Florida homeowners insurance since 1972. As an admitted carrier licensed by the State Department of Insurance, its members are protected by the Florida Insurance Guarantee Association (FIGA). The Exchange purchases coverage from the Florida Hurricane Catastrophe Fund (FHCF) to reduce its overall loss in the event of a hurricane. It has a low B rating with AM Best and an A+ Better Business Bureau rating.

Staying in touch with your mortgage lender is super important when it comes to timely payment of homeowners insurance. If you’re not on top of things, your lender might take matters into their own hands and buy homeowners insurance for you. You never want that to happen. Lender-placed home insurance is more expensive by about five times as compared to regular homeowners insurance rates. Plus, the terms aren't as good and it will inevitably increase your monthly payments.

State-Run Citizens Property Insurance

Despite recent legislation supported by the Governor’s office that aims to resolve the state’s home insurance crisis, the current market volatility leaves Florida homeowners with limited opportunities, like the state-run Citizens Property Insurance or even self-insurance options. Good news though, the Florida Insurance Department offers a handy rate comparison tool called CHOICES, which helps homeowners find more affordable insurance options. 

Many Florida homeowners have turned to Citizens Property Insurance. As the state-backed, last resort insurer, Citizens' market share has doubled over the last 18 months, with an average of 30,000 new subscribers each month and projections of nearly 2 million home policies in force by the end of 2023. But it’s not just the number of policies that's concerning. Citizens could be taking on more risk than they can handle in the event of a major disaster. 

According industry analysts, Florida is a unique marketplace with its combination of severe weather and restrictive legislation that could cause homeowners to see up to a 40% increase in rates, without filing a claim.  This crisis has caused some homeowners to decline purchasing insurance. In fact, a recent survey by the Insurance Information Institute found that more people (approximately double the national rate) are self-insuring their homes. But, this is only an option for those without a mortgage.

Although there is a sincere desire to rebuild Florida’s home insurance market, there are complex challenges to overcome.  While the home insurance landscape in Florida continues to undergo significant changes, it is essential for today’s homeowner to explore all of their options as well as understand the potential risks involved with their decision. As a homeowner, you deserve peace of mind and protection for your investments while residing in the Sunshine State.

Should You Refinance Now That Rates Have Dropped? 

It depends, but it’s never a bad idea to check with us. Bee Mortgage offers an industry leading streamline refinance as easy as apply, approve, close. 

Apply 
  • Apply on your own time, not the bank's
  • Estimated time: Usually no longer than 30 minutes in most cases

No one life or schedule or calendar is the same. It simply sucks to be working around banker’s hours, endlessly waiting on them to do their job. At some point in the consolidation of the mortgage industry, the customer experience along with a primary customer satisfaction focus was lost in the bustle of regulations, tightening margins, and greedy banks. Simply put, Carl works different hours than Katie does and both have different times when they’re free and able to focus on applying for a streamline refinance to lower the rate and payment, or consolidate debt.  

Approve
  • Reviews are
  • Estimate time: As fast as 8 days

While some unique properties require more documents, this is the part where you’ll most likely only send in the declaration page of your homeowners insurance policy. You can text or email that over to us, easy peasy. Most homeowners who are not taking cash out of equity in the refinance don’t need an appraisal. In the approval process we’ll make sure the title is clear, verify the taxes and any other dues are correct, then have an underwriter review the file for final approval. Once final approval is given we’ll have the closer and the title agent prepare the closing docs for e-signature (if able to be e-signed). 

Close
  • This is the easy part! 
  • Estimate time: Usually no longer than 15 minutes in most cases 

If we’re e-signing closing docs, it’s super easy and super fast, plus you never have to leave the couch. If we send a remote notary to your home, that’ll be easy too. Don’t worry though, the remote notary can meet you anywhere you want, so it’s convenient for your schedule. Once you get done signing, you’re done! 

Discover how you can add almost $400,000 to retirement from your mortgage! 

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This is not professional financial advice. Consulting a qualified advisor about your particular circumstances is recommended. Homeowners insurance cancellations may happen due to an increase in the risk level for things like wildfires or storms, nonpayment of premiums, or other issues. If your home insurance is canceled, contact the insurance company to discuss the issue before you start shopping for new coverage. The silver lining is that if you haven't shopped for home insurance recently, you may be able to find a cheaper rate with another company.

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