The sunshine state is often called the Pensioners’ paradise for good reason. It is the number one destination in the U.S. for retirees because of its balmy weather, low income and property taxes, active lifestyle opportunities, and its proximity to myriads of beaches and theme parks. For many infamous reasons, it is also one of the toughest states to get homeowners insurance, and that’s the topic of today’s blog.
Florida is home to six of the ten named home insurance perils including hurricanes, tornadoes, thunderstorms, floods, extreme heat and wildfires. When you add sinkholes, mold and termites to that mix, it is easy to figure out why it is so hard to obtain homeowners insurance in the state.
Florida’s homeowners insurance covers many types of losses. Every type of coverage is not available to all homeowners because of geography and location. The type and cost of insurance depends on which part of the state a home is located in. The state’s population is densely packed around the peninsula’s coasts and these are the areas that bear the highest risks. This means it is difficult to obtain insurance for oceanfront homes and homes located in hurricane zones. Homes located in areas prone to sinkholes may not get coverage for this type of loss. Since risks are lower for homes located in the central and northern part of the state, geography is less of a concern in these areas.
Florida laws protect insurance companies by allowing them to not accept applications in any part of the state for new or increase in existing coverage when the National Weather Service issues a warning or watch for hurricanes or tropical storms. Florida’s homeowner’s insurance does not cover flood damage, including water damage from a storm surge. Buying flood insurance may be impossible or prohibitively expensive for homes located in FEMA designated flood zones.
To remain competitive, insurance companies are expected to maintain top financial ratings from rating services firms like AM Best. If insurance companies’ issue too many policies to Florida homeowners, their financial ratings could be downgraded which in turn would make them less attractive compared to their competitors. Given Florida’s population growth, large numbers of applications are submitted to insurance companies annually and the underwriters selectively issue policies to low-risk homeowners with top credit ratings.
Due to historic and unprecedented number of natural disasters in recent years, insurance companies in Florida have issued billions of dollars to homeowners during this past decade. Unable to recover and remain profitable after such huge losses, many insurance companies pulled out of Florida, a couple of them were ordered to liquidate and three were taken over by the state government. For all these reasons it has become very difficult to get homeowners insurance in the state.
To ease the insurance crisis, the Florida legislature created a state insurance fund called the Citizens Property Insurance Corporation in 2002. It is now Florida’s largest home insurer. For many years, this was the only option for Floridians. However, due to calmer storm and hurricane seasons since the past couple of years, eight global insurance carriers have cautiously entered or re-entered the homeowner insurance market in the sunshine state.
While new homeowners continue to relocate to Florida to enjoy beautiful beaches, abundant sunny days, low taxes and other benefits, there aren’t a lot of companies left in the sunshine state that offer homeowners insurance.
Here are a few homeowner insurance resources for Florida residents:
The Florida Office of Insurance Regulation (FLOIR): http://www.floir.com/
Citizens Property Insurance Corporation: https://www.citizensfla.com/index.cfm
Florida Market Assistance Plan (FMAP): http://www.fmap.org/
Florida is home to six of the ten named home insurance perils including hurricanes, tornadoes, thunderstorms, floods, extreme heat and wildfires. When you add sinkholes, mold and termites to that mix, it is easy to figure out why it is so hard to obtain homeowners insurance in the state.
Florida’s homeowners insurance covers many types of losses. Every type of coverage is not available to all homeowners because of geography and location. The type and cost of insurance depends on which part of the state a home is located in. The state’s population is densely packed around the peninsula’s coasts and these are the areas that bear the highest risks. This means it is difficult to obtain insurance for oceanfront homes and homes located in hurricane zones. Homes located in areas prone to sinkholes may not get coverage for this type of loss. Since risks are lower for homes located in the central and northern part of the state, geography is less of a concern in these areas.
Florida laws protect insurance companies by allowing them to not accept applications in any part of the state for new or increase in existing coverage when the National Weather Service issues a warning or watch for hurricanes or tropical storms. Florida’s homeowner’s insurance does not cover flood damage, including water damage from a storm surge. Buying flood insurance may be impossible or prohibitively expensive for homes located in FEMA designated flood zones.
To remain competitive, insurance companies are expected to maintain top financial ratings from rating services firms like AM Best. If insurance companies’ issue too many policies to Florida homeowners, their financial ratings could be downgraded which in turn would make them less attractive compared to their competitors. Given Florida’s population growth, large numbers of applications are submitted to insurance companies annually and the underwriters selectively issue policies to low-risk homeowners with top credit ratings.
Due to historic and unprecedented number of natural disasters in recent years, insurance companies in Florida have issued billions of dollars to homeowners during this past decade. Unable to recover and remain profitable after such huge losses, many insurance companies pulled out of Florida, a couple of them were ordered to liquidate and three were taken over by the state government. For all these reasons it has become very difficult to get homeowners insurance in the state.
To ease the insurance crisis, the Florida legislature created a state insurance fund called the Citizens Property Insurance Corporation in 2002. It is now Florida’s largest home insurer. For many years, this was the only option for Floridians. However, due to calmer storm and hurricane seasons since the past couple of years, eight global insurance carriers have cautiously entered or re-entered the homeowner insurance market in the sunshine state.
While new homeowners continue to relocate to Florida to enjoy beautiful beaches, abundant sunny days, low taxes and other benefits, there aren’t a lot of companies left in the sunshine state that offer homeowners insurance.
Here are a few homeowner insurance resources for Florida residents:
The Florida Office of Insurance Regulation (FLOIR): http://www.floir.com/
Citizens Property Insurance Corporation: https://www.citizensfla.com/index.cfm
Florida Market Assistance Plan (FMAP): http://www.fmap.org/
