Increasing Home Insurance Rates in Florida

The home insurance market in Florida has always been complex but issues in recent years have made it nearly collapse completely. In the past five years, eleven property and casualty companies offering homeowners insurance in the Sunshine State have been forced to liquidate. Five of those companies liquidated in 2022 while United Property and Casualty Insurance Company liquidated this year.

Many other home insurers have simply left the state altogether. Those that are staying have drastically tightened the eligibility requirements on their policies, increasing their rates, or choosing to non-renew many of their policies. For homeowners, the news is bleak, as they are facing higher premiums and fewer insurance companies offering policies. For some, it has even caused them to default on their mortgages and eventually lose their homes.

Why are Home Insurance Companies Leaving the State?

Due to Florida’s location and elevation, the state has always been a risky market for home insurance companies. However, there is more to the current crisis than just that. Home insurance companies are not leaving the state due to the fact that it largely lies in an area known for hurricanes and tropical storms. The other reasons insurers are leaving the state are as follows:

• Insurance fraud: Insurers are arguing that fraud is the biggest problem in the state right now. While Florida makes up only nine percent of home insurance claims in the country, the state accounts for 79 percent of the entire nation’s lawsuits regarding home insurance. It is not homeowners that are committing this fraud but rather contractors. Contractors tell homeowners they need work on their home, such as a new roof, and they pressure the homeowner to sign an assignment of benefits, which allows the contractor to file a claim on the homeowner’s behalf.
• Roof age: Some companies have chosen not to leave but instead, they have tightened their underwriting restrictions to reduce their exposure to scams. Many companies such as Progressive, Southern Fidelity, and Universal have chosen to non-renew tens of thousands of policies. Today, companies are no longer allowed to deny coverage based solely on the age of a roof as long as the roof is less than 15 years old and has a five-year life expectancy at the time the policy is taken out. Some companies are not comfortable with these restrictions and so, they choose to leave instead.
• Storm risk: Again, the high-risk location of Florida has caused some insurance companies to leave the state. Still, other states are considered high risk for weather events but coverage is still available. For example, homeowners in Oklahoma pay the highest national premiums at $3,593 a year for a $250,000 dwelling but homeowners in that state do not have trouble finding a policy that protects them.

The Problem Florida Homeowners Are Facing

It may seem as though factors such as fraud and the risk of storms are the only problems for insurance companies trying to make a profit in the state. Like nearly everything else, though, any time an industry is facing trouble it is the consumer that feels it the most. This is the case for the latest homeowners insurance issue, as well.

In 2023, the average homeowners insurance policy cost $6,000, which is a big jump from the nation’s average of $1,700 in the same year. In fact, in the last year alone homeowners insurance premiums in the state have soared by 42 percent. Since 2018, those rates have skyrocketed by 206 percent, according to the Insurance Information Institute.

The cost of paying the high premiums is simply too much for many Florida homeowners. Not only are their monthly budgets feeling the pinch, but many are finding the cost of paying the high premiums as well as their mortgage too great to bear. It has even led to many foreclosures throughout the state.

As of May 2023, Florida had 2,901 foreclosure starts, which places the state fourth in the entire country, behind only Illinois, Maryland, and New Jersey. Currently, one in every 2,470 housing units in Florida is in foreclosure. While high insurance premiums are something all homeowners want to avoid, losing the property is devastating for anyone who is facing foreclosure.

How to Stop Foreclosure

Facing foreclosure is very scary. You are likely confused, scared, and unsure of what to do. Fortunately, you do have options that can stop the process. The most common of these are as follows:

• Bankruptcy: A Chapter 7 or Chapter 13 bankruptcy may be able to stop the foreclosure process. Although Florida has some of the most generous bankruptcy exemptions in the country, a Chapter 7 bankruptcy could still put your home at risk. A Chapter 13 bankruptcy, on the other hand, can reorganize your debt over a period of three to five years and you are not at risk of losing your home.
• Loan modification: If your mortgage payments have become too difficult to pay, you may be able to negotiate a loan modification with your lender. A loan modification can change many terms of your loan including the interest rate, the monthly payment, and even the term of the loan.
• Sell the home: Unfortunately, selling your home may be the only option to stop foreclosure. You may be able to break even by selling the home, or even make a profit. You could potentially even buy another home that is in your price range. Owning another home immediately following foreclosure is not possible.

Call Our Foreclosure Defense Attorneys in Florida for Help with Your Case

The higher insurance rates have made life difficult for all Florida homeowners. If you are in danger of losing your home, you need sound legal advice. At Loan Lawyers, our Florida foreclosure defense attorneys can provide it and advise on ways to save your home and protect your future. Call us now at (954) 523-4357 or fill out our online form to schedule a free consultation with one of our experienced Fort Lauderdale foreclosure defense lawyers and to learn more about how we can help.