When a disaster hits and your home
has severe damage, your home insurance policy feels like a treasured gift. The
other 99% of the time, though, it feels like one more bill coming out of your
paycheck.
Because of this, many Florida
homeowners are understandably distressed to see premium increases on the
horizon. Why is this happening and what can you expect from your Florida home
insurance rates?
How Much Are Florida Home
Insurance Rates Rising?
Some Florida homeowners have
already seen increases in their insurance rates. Others will see those
increases this year, whether or not they realize it.
The exact amounts of the
increases vary from carrier to carrier. While some are 10% or lower, other carriers
are requesting up to 40% increases.
In many cases, homeowners won’t
know what to expect until the increases hit their bills. Many carriers are
still weighing their options and determining what their increases will be.
Why Are Florida Home
Insurance Rates Going Up?
Increases in Florida home
insurance rates aren’t only happening in a few isolated carriers. They’re
across the board, more or less. As it turns out, there are several reasons why
this is happening.
1. Increased Hurricane Losses
The threat of a hurricane is a
crucial reason for any Florida homeowner to have insurance. The problem is that
hurricane activity has increased dramatically over the past few years.
There have been major hurricanes
at least once each year since 2017. In the past, insurance carriers had enough
time between major hurricanes to recuperate their losses. In recent years,
though, they haven’t had that crucial recovery time.
This raises your insurance
carrier’s expenses in more ways than simply paying out claims. Insurance
companies have reinsurance as well. Think of reinsurance as insurance for
insurance companies.
The reinsurance carriers are
raising their rates for Florida providers because of the higher hurricane risk.
This means higher expenses for your insurance carrier, which means higher premiums for you.
2. Attorney Fee Multipliers
The attorney fees multiplier is
an interesting part of Florida law. It allows attorneys to charge three times
their hourly rate in lawsuits involving insurance companies.
This was meant to discourage
insurance providers from suing customers who can’t afford the legal battle.
However, some attorneys have taken advantage of the law and encouraged their
clients to sue insurance companies. While the homeowner ends up with a small
winning, it costs the insurance companies a huge amount that goes into the
attorney’s pocket.
These situations are further
raising your insurance carrier’s costs. They need to charge more to make ends
meet.
3. Demotech Ratings
Demotech is a company that rates
insurance carriers based on their financial stability and their ability to pay
out claims. After all, no homeowner wants insurance from a company that can’t
pay them if a disaster happens.
In January, Demotech announced
that they would downgrade certain providers’ ratings if
those providers didn’t increase their financial strength. The fastest way for
providers to do this is to increase their premiums.
Tips to Lower Your Home
Insurance Rate
All of the reasons above for
rising insurance rates aren’t in your control. However, that doesn’t mean
you’re powerless. There are several steps you can take to lower your insurance
rates in other ways, offsetting part of all of the rate increases.
1. Buy a Bundle
As important as your home
insurance is, you’re likely to also need auto insurance, health insurance, and
other types of insurance. In many cases, an insurance carrier offers all of
these products.
If you buy multiple types of
insurance from the same carrier, you’re likely to receive a bundling discount.
In many cases, the more products you bundle, the higher the discount will be.
2. Check Your Discounts
Insurance providers offer
discounts for a wide range of factors. The problem is that you may be eligible for
discounts you didn’t realize existed.
Ask your insurance carrier for a
list of potential discounts and a list of discounts you already receive. You
may already be eligible for some discounts based on your age or certain aspects
of your home. In other cases, easy tasks like specific inspections can earn
discounts for you.
3. Avoid Overbuying
A common mistake with home
insurance is buying insurance based on the price or total value of your home.
Remember that this value includes the value of your land as well as the home
itself.
If you need to rebuild your
house, the land’s value stays the same. In other words, it won’t cost as
much as your full property value to rebuild your home.
Instead, research the estimated
cost it would take to rebuild your home. Use that as your dollar amount for
buying insurance.
4. Take Specific Home
Protection Measures
The less likely your home is to
sustain damage, the lower of a risk it is for your insurance provider. This
allows them to offer you a lower premium because they can afford the lower
risk.
Each carrier is unique, so ask
your insurance carrier what measures you can take to lower your rates. For
example, adding certain security features can give you a lower premium.
Another popular option,
especially in Florida, is to make home improvements that protect your home
against water damage. Be sure to ask your carrier about any specific
stipulations, though.
Keeping Your Florida Home
Insurance Rates Affordable
If you’re in the midst of a
financial strain from COVID-19, hearing that your Florida home insurance rates
are rising can be an added stressor. If you take the right measures, though,
you may be able to keep your rates affordable while maintaining the protection
your home needs.
