Why is home insurance so expensive in Florida?

Mon Mar 16 2020

If you own a home in Florida and you feel like you’re paying more for your homeowners insurance than your friends and family around the country, you’re not imagining things.

Florida homeowners insurance does cost more than insurance in most of the rest of the country. In fact, the only state where average homeowners insurance costs are higher is Louisiana at an average of $1,968 per year.

So what gives? Why are homeowners insurance rates in Florida so high? And more importantly: what can Florida homeowners do to manage those costs? Let’s find out.

Why Florida homeowners insurance costs so much

Florida has a higher risk of expensive weather-related catastrophes than most other states in the nation. That's the short answer to why homeowners rates are higher in Florida, although it is a bit more complicated than that.

Because Florida sits between the Atlantic Ocean and the Gulf of Mexico, it has catastrophe exposure on both its east and west coasts (most states don’t even have both an east and west coast!), from two different water bodies that have different weather patterns.

But it’s not just the fact of catastrophes that pushes Florida insurance costs so high. It’s also the nature of those catastrophes. Hurricanes are unlike other types of damage in that they tend to cause serious damage to large geographical areas.

For insurance companies, this makes it harder to manage risk: while a theft or house fire can cause serious damage to a single property, a hurricane is likely to harm an entire town. That means an insurance company will likely have lots of claims at the same time, which is both expensive and logistically hard to manage.

Because of this difficult-to-manage risk, many insurance companies have stopped writing homeowners policies in Florida (or never got into the state to start with). This can drive costs up even more: fewer carriers in the marketplace means less competition, which means higher prices (see Figure 1).

Figure 1: Reasons for the high cost of homeowners insurance in Florida

So the downside is there are underlying reasons Florida homeowners insurance rates are higher than in other parts of the country. But the upside is that there are things Florida homeowners can do to reduce the amount they pay for homeowners insurance.

How Florida homeowners can find lower-cost insurance

We’ll break our cost-savings tips into two sections: tips for those who are currently on the market to buy a home and those who already own a home they plan to stay in for a while.

If you’re shopping for a home…

Good news: if you don’t yet own a home and you’re already aware of the high costs of Florida homeowners insurance, you're ahead of the game. Because you know what to be on the lookout for, you may be in a position to manage some of your costs from the get-go.

As you’re looking at properties, be sure to ask your agent about the history of hurricanes in the area. They should have general information about which areas tend to be hit by storms and how badly. But don’t stop there. It’s also a good idea to take these measures:

  • Review the seller’s disclosure. Sellers are required to tell you about past damage to the home. The only problem with this is that the seller may not be aware of the damage that happened before their time.
  • Ask your insurance provider to pull a CLUE (Comprehensive Loss Underwriting Evaluation) for any property you’re thinking of buying. This report will indicate whether the home has ever had insurance claims and can provide additional insight into a seller’s disclosure, especially if the seller hasn’t lived at the property long.

Knowing how badly a property was hit by major storms in the past can help you know what to expect in the future – such as high homeowners insurance premiums. It can also help you understand if the property has a history of flooding; if it does, you’ll want to purchase a flood insurance policy in addition to your standard homeowners policy, as flood coverage is not included in standard homeowners insurance.

Don't forget to know more about the Florida Homestead Exemption and if you can apply for the same.

If you plan to stay in your current home for a while…

If you already have a home and you’re hoping to lower the cost of your homeowners' insurance, there are several steps you can take to make that happen:

  • Update your property so it’s more resilient to storm damage. In Florida, that typically means making wind-mitigation upgrades, making sure you have a working sump pump with a backup power source, and mending any external cracks that might let in water. Many insurance companies offer lower rates to homeowners whose properties are best prepared to weather storm damage.
  • Check out new home insurance options. While options may be limited in Florida, it’s still a good idea to see what’s available before renewing your existing policy. Not sure what to look at when you shop around? Check out our tips for comparing home insurance policies.
  • Compare premium and deductible costs. In most cases, opting for a higher policy deductible will yield lower monthly premium costs. Of course, this means that in the event of a claim, you’ll have to pay more out of pocket than you would with a lower premium. Be sure you have a clear understanding of what you’ll be expected to pay before choosing a higher deductible.

Pro tip: Try Kin

We’d be remiss if we didn’t mention that you should consider buying your insurance from us. In fact, we founded Kin with the goal of making homeowners insurance more affordable for Florida residents. Today, we’re making that happen via three strategies:

  1. Reinsurance. Without getting into the nitty gritty too much, this means we’ve found ways to manage the risk we face internally when major storms hit. So even in the event of a huge disaster, we’ll be able to deliver the service and care – not to mention coverage – our customers expect.
  2. Direct-to-you model. We don’t sell Kin policies through agents, which means we don’t have to maintain costly storefronts. And that means we save a lot of money. We pass those savings along to you.
  3. More data. A typical homeowners insurance policy uses 30 to 40 data points to evaluate a home’s risk. At Kin, we use thousands. This lets us make more granular risk assessments based on your actual property – not the general neighborhood or area you live in.

If our rates aren’t the lowest available, we’ll help you shop around and make an apples-to-apples comparison on your choices. That’s only fair to you.

In short, do what you can to make your home more resilient to storms, and be sure to see what’s out there when it’s time to renew. Your options may surprise you.


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