What is causing the homeowners insurance rate crisis in Florida?

On average, Florida homeowners pay some of the highest insurance rates in the entire country for homeowners insurance. That's why some of these homeowners were shocked to learn their rates were going to be increasing by as much as 47%. This leaves many scratching their heads especially when they haven't filed any homeowner insurance claims.

Here are some of the major reasons we have seen the rates increase by historic levels and what to do if you were affected:

Cost of litigation skyrocketing

The biggest factor that goes into the cost of insurance is the amount the insurance carrier pays for claims. In 2019 and 2020 record numbers of homeowners in Florida used attorneys to file non-hurricane related insurance claims. According to one carrier, the utilization of theses attorneys and the fees that are paid greatly increased the cost to resolve claims.

Water losses are much more severe

One of the most common claims in Florida is related to plumbing issues and 2020 saw a huge rise in the cost to resolve those claims. Some insurance carriers even changed their claims model to specifically address water losses by requiring claimants get competitive quotes or use their own preferred repair person in order to avoid overpayment.

Reinsurance rates are going up

Most consumers may not realize that insurance companies also buy insurance called reinsurance. This is what helps smaller Florida domiciled companies write insurance without fear of going bankrupt from a single large hurricane event. More and more companies are relying on this type of stop-loss and this year those rates are going up dramatically.