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Florida’s Insurance Crisis: Why Private Insurance May Be Your Best Option

Jan 15, 2024

There have been dramatic increases in home insurance premiums in Florida over the last several years. In 2023, according to the Insurance Information Institute, the average homeowners policy in the state was $6000, which is an increase of 42% over the average premium in 2020. Across the country the rates also rose, but only by 11%, resulting in an average cost in other states of about $1700.

To make matters worse for homeowners and home buyers, the availability of insurance carriers offering homeowners policies in the state is decreasing. There are several large insurance companies that have pulled out of the state, and a significant number of smaller companies are ending homeowners insurance coverage or going out of business altogether.

There are some very good reasons why a private home insurance company in Florida chooses to leave the state. Lawsuits against insurance firms in Florida have skyrocketed to levels not seen in other states. The added issues with increasingly frequent and severe storms have increased claims, resulting in loss of profits and financial instability for insurance companies. Many insurance companies felt the brunt of the large number of storms in 2004 and 2005 that resulted in record damage and claims, and they did not recover as storms continued to increase in the following years.

The State-Backed Insurance Option and Issues

In 2002, the state legislature created Citizens Property Insurance Corporation Florida, a state-backed insurance company designed to help homeowners find affordable insurance. At that time, this insurance was designed for homeowners who could not qualify for policies, even from a cheap private insurance firm in Florida. This often meant the home was older, had electrical, plumbing, or structural issues, or was in a high-risk zone for storm damage.

In the last few years, and specifically since the insurance premium increased after 2020, more homeowners have been turning to Citizens state-backed insurance in Florida. While the history of Citizens insurance is of stability and paying claims, there are some concerns about this in the future. In 2023, a senate committee was formed to determine the ability of Citizens Insurance to pay on claims, particularly if there is another significant hurricane.

This is only possible as Citizens has the ability to add special assessments to drivers and home insurance policyholders that are not covered by Citizens. This would create a massive increase in everyone’s premiums, providing the funds Citizens would need to pay claims. In the event of a “1-in-a-100-year storm,” these added premiums could be as much as $162 billion, according to reinsurance company estimates. Floridians would be paying this for years, and there is the possibility that Citizens could turn to the federal government for a bailout.

The Benefits of Buying from a Private Insurance Agency in Florida

Choosing a private home insurance company offers several advantages over the state-backed insurance option. Our team at Del Toro Insurance works with homeowners to find the best coverage at the most affordable prices, ensuring you are covered to the level required.

Some of the coverage options available through Del Toro Insurance that are not possible with Citizens include water backup, increased mold coverage, dog and animal liability, and hurricane screened enclosure insurance. We offer insurance for all values of homes, including the high-value homes throughout Hialeah Gardens, FL; Margate, FL; Homestead, FL; Palmetto Bay, Cutler Bay, North Miami Beach, Coral Gables, Hialeah, FL; Naples, FL; and Miami, FL.

Customizing your coverage and insuring your home to the correct level to protect your most valuable asset are key benefits to getting the most affordable private insurance quote in Florida. Private insurers are financially stable and have the funds to pay out claims, even with a significant storm.

When you are ready to review your home insurance, talk to the team at Del Toro Insurance. Call us at 305-335-8676 or drop in and speak with an agent.

FAQ:

What is the difference between private insurance and state-backed insurance?

Private insurance is purchased directly from the insurance company, while Citizens is a state-backed, not-for-profit, tax-exempt government plan and entity.

Why is Citizens Property Insurance Corporation under investigation?

There are significant concerns about Citizens Insurance being able to pay claims in the event of a major storm. As they insure many of the highest-risk properties, there is increasing concerns as climate change impacts storm frequency and level of destruction and damage.

What are the benefits of choosing private insurance?

Del Toro Insurance can provide homeowners with customized private insurance coverage to the levels needed to protect their assets.

How can I find the right private insurance company for me?

Let the experts at Del Toro Insurance help you find the right private insurance company for your insurance requirements.

What will happen if Citizens Property Insurance Corporation becomes insolvent?

Under the law, additional surcharges are added to all Floridians, allowing Citizens to pay claims. However, in a major storm, there is a concern that a federal bailout may be the only solution.

What is being done to address the Florida insurance crisis?

Citizens is depopulating its programs, moving policies to private insurance companies. In addition, changes to litigation laws around homeowner insurance policies may have a positive impact on bringing insurance companies back to the state.

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