Property Insurance Rates In Florida Are On The Rise

This isn’t the first time we’ve experienced double-digit year over year price increases for property insurance and real-estate simultaneously in South Florida. Let’s just hope it plays out better than the first time which coincided with the record 04’-05’ hurricane seasons during the housing boom. Based on the August sales figures from the Florida Association of Realtors, home prices in South Florida have risen an average of 12% over a year ago. The boom is being driven by a combination of a record economy prepandemic, pent up demand to move to South Florida due to the pandemic, record low mortgage rates and record stock market performance. It’s a story I foreshadowed in my February storyThe South Florida Housing Boom is Back.

What I didn’t discuss in that story is the rising property insurance rates. It’s no secret that Florida has been experiencing more and stronger hurricanes in recent years. After not having been impacted by a major hurricane since Wilma in 2005, Florida had majors in back to back years with Irma in 2017 and Michael in 2018. This while hurricanes like Harvey, Laura and Sally have brought extensive destruction to neighboring states. All of this adds up to higher property insurance claims, higher reinsurance costs for Florida’s property insurers and of course, higher premiums for us. Regardless of who your property insurer is, you should probably expect a meaningful increase in cost at your next renewal. 

Florida’s largest property insurer, Fort Lauderdale’s Universal Property and Casualty has filed for a 12.4% increase with the state of Florida, ten insurance companies have requested an increase in excess of 15%, that's more than the prior nine years combined and the smallest increase requested is 5.5%. The bottom line is this. Insurance costs appear to be headed 5.5% to 26% higher based upon who your insurance company happens to be. In a separate story today, I’ll dig into why you should shop for home insurance rather than just accepting whatever your renewal increase will be. But word to the wise now, insurance premiums are already more expensive in Florida than any other state and they’re heading higher from here. You should be especially mindful if you’re looking to purchase a home to account for these increases along with projected property taxes increases. Also be mindful that the federal flood insurance costs are also on the rise independent of property insurance. I don’t enjoy being the bearer of bad news but you definitely need to know what’s coming so we can prevent issues like what happened over a decade ago during the housing bubble from happening again.

Photo by: Getty Images

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