Multiple Problems Ahead This Year for Florida Home Insurance

In spite of three straight mild Florida hurricane seasons, you should expect problems in the year ahead.

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 concern 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 could be a very nasty surprise on top of an annual premium that is already high to begin with.  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.

Homeowner insurance policy cancellations will continue to occur in Florida 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 will add to the 10-15% rate increases that have already been approved.  The discounts your company might be discontinuing could include discounts for never having filed a claim or those associated with buying more than one type of insurance coverage from that company.  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 since there have not been any hurricanes in the last three years.  Last year three companies failed financially and were taken by the state.  In the last year, over 50% of all active homeowners insurance companies in Florida 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 a lot more and end up with a company that won't survive the next Florida hurricane.

Now more than ever, it is essential that you don't buy Florida home insurance just on price.  If you do, the only one you can blame if you don't get paid after the next Florida hurricane is yourself.