As a Florida homeowner, you’ve likely noticed an increase in your homeowners insurance premium in recent years. It’s important to be aware of why home insurance rates are increasing, so you can make smart buying decisions for yourself and your family.
While many factors contribute to rate hikes, some of the most common causes include:
- Assignment of Benefits Fraud
- Effects of Hurricane Irma
- Reinsurance
Understanding these factors can better protect yourself and your family against rising insurance costs.
WHY ARE FLORIDA HOMEOWNERS SEEING A DRAMATIC INCREASE IN INSURANCE RATES?
Florida homeowners have struggled to keep up with rising property insurance rates for years. Despite reforms passed during the 2021 Legislative Session, rates have continued to increase at an alarming rate.
The industry is also losing billions of dollars to frivolous lawsuits from third-party contractors. In the first three quarters of 2021 alone, Florida insurers had $1.22 billion in underwriting losses.
Homeowners insurance is essential for protecting people's homes and possessions, but the current system leaves many residents struggling to make ends meet.
3 REASONS WHY FLORIDA INSURANCE RATES ARE INCREASING
There are more than just lawsuits behind the increased homeowners insurance rates in Florida. Here are three more reasons you might see rates rising.
1. AOB Fraud
Florida homeowners who sign an Assignment of Benefits (AOB) form essentially hand over their insurance claims rights to a third party (such as repairmen and contractors). This means that the third party will have the power to file claims, make repair decisions, and collect insurance payments on the homeowner’s behalf.
While AOBs can be helpful in some situations, they can also be abused by unscrupulous contractors who inflate repair costs or attorneys who file frivolous lawsuits. As a result, AOBs have come under scrutiny in recent years, and many Florida homeowners are now reconsidering whether they’re worth the risk.
As anyone who has ever dealt with their Florida homeowner insurance knows, it can be a stressful and challenging process. When dealing directly with the contractor, various risks can arise.
For one, contractors may be tempted to exaggerate the value of the work they’ve done in an effort to pocket more money from the insurance claim. Things can quickly escalate when an insurance company recognizes the inflated amount and refuses to pay the contractor as requested.
In these situations, contractors may take legal action against the insurance company, threatening expensive legal fees and lengthy lawsuits that ultimately benefit no one. To avoid these costly and time-consuming conflicts, Florida homeowners should work closely with their insurance companies throughout any home repair or improvement project.
By keeping a watchful eye on expenses, Florida homeowners can better protect themselves from fraudulent activity by unethical contractors.
2. Homeowners and insurance companies are still feeling the effects of Hurricane Irma
Hurricane Irma was one of the most powerful and destructive storms ever recorded.
When it made landfall in Florida on September 10, 2017, it caused billions of dollars in damage and left many homeowners without insurance protection.
Florida is one of the most hurricane-prone states in the country, and as a result, its homeowner insurance rates are some of the highest in the nation. Unfortunately, many Florida homeowners do not have adequate coverage to protect them from a major storm like Irma.
As a result, those homeowners will be forced to bear the brunt of the financial losses. For those already struggling to make ends meet, the damage caused by storms like Hurricane Irma may be too much to overcome for many homeowners.
3. Reinsurance
Reinsurance is an essential tool for protecting insurance carriers from the potentially devastating financial impact of a catastrophic event, such as Hurricane Irma.
By passing on a portion of the risk associated with insuring Florida homeowners, insurance companies can keep their premiums affordable and more accessible to policyholders. This allows more people to protect themselves against the risk of losing their homes and belongings in a natural disaster.
Overall, reinsurance serves as an essential safeguard against financial loss, enabling insurers to protect their customers better and safeguard the well-being of Florida communities.
HOW MUCH ARE THE RATES PROJECTED TO INCREASE?
Florida homeowners have long been accustomed to paying higher rates for insurance than most other states.
In 2020, the average premium was $651 more than in nearby states like Georgia and Alabama. This year, that gap is projected to grow to $866.10.
As a result, Florida homeowners will continue to pay higher rates for insurance, but some steps can be taken to help offset the cost. Shopping around for quotes and discounts, raising deductibles, and bundling policies are effective ways to save on Florida homeowner insurance.
If you’re in the market for home insurance, it’s important to be aware of the rate increases that are happening in Florida. While these may seem like complicated topics, we hope this post helped you better understand the reasons behind the insurance price increase.
If you need help finding the best Florida homeowners insurance coverage for the best price, start by speaking to a SimplyIOA agent at 833.872.4467 or get a homeowners insurance quote online now.
