FLORIDA PROPERTY INSURANCE: All You Need To Know

Safeguard your portion of the radiant Sunshine State with insurance tailored for Florida properties. Florida property insurance provides comprehensive coverage for property owners against damage or loss, including fire, theft, and natural disasters. It includes features like wind mitigation discounts, opening protection, hurricane loss mitigation discounts, fraud prevention measures, financial stability, personal property coverage, and location-based credits. For better insurance coverage in Florida, it is pertinent that you have a clearer understanding of what the insurance policy covers, from features to benefits to cons, as well as factors to check if it defines your interest.

Florida Property Insurance

Florida property insurance refers to insurance coverage that protects property owners in the state of Florida against damage or loss to their properties. This type of insurance includes coverage for various perils, such as fire, theft, and natural disasters. Florida property insurance aims to provide comprehensive coverage, encourage risk mitigation measures, and offer various features to protect property owners from potential risks and losses.

Features of Florida Property Insurance

Florida property insurance includes various features and provisions to protect property owners against damage or loss.

#1. Coverage for Perils

Florida property insurance provides coverage for a range of perils, including fire, theft, vandalism, and natural disasters like hurricanes and windstorms.

#2. Wind Mitigation Discounts

Florida law requires insurance companies to offer discounts for homes and businesses with documented wind damage mitigation features. These features can include impact-resistant windows, reinforced roofs, and storm shutters.

#3. Opening Protection

Opening protection refers to the level of wind-resistant features present in a property. Florida homeowners insurance policies may include provisions related to opening protection, which can affect the premium and coverage.

#4. Discounts for Hurricane Loss Mitigation

Florida legislation has provided premium discounts for residential property insurance to incentivize homeowners to implement hurricane loss mitigation measures. These measures can include wind-resistant construction techniques and materials.

#5. Fraud Prevention Measures

Due to fraudulent lawsuits and the high overall claim risk in Florida, insurance companies have faced challenges. Recent legislation aims to address these issues and implement consumer protection measures to increase competition and accountability in the property insurance market.

#6. Financial Stability

Property insurance in Florida is essential for ensuring financial stability in the event of property damage or loss. Insurance companies and entities like Citizens Property Insurance Corporation play a role in providing coverage and managing risks.

#7. Personal Property Coverage

Property insurance in Florida includes coverage for personal belongings or contents of the insured property. This coverage, known as Coverage C, helps reimburse the policyholder for the loss or damage to their possessions within the insured property.

#8. Location-Based Credits

The location of the insured property can also impact the insurance premium. Living in a gated community or an area with heightened security measures can result in credits or lower premiums due to reduced risk of break-ins.

#9. Home Age Considerations

The age of the house can also affect insurance premiums. Newer homes, built to higher standards, are often considered more capable of withstanding high winds and driving rain, resulting in potentially lower premiums.

#10. Inspections and Additional Safety Measures

Insurance companies, including Citizens Property Insurance Corporation, may offer inspections to identify areas where homeowners can make their homes safer and qualify for additional discounts or coverage options.

Limitations of Florida Property Insurance

Florida property insurance has certain limitations that policyholders should be aware of, including these key limitations

#1. Hurricane Deductible

Florida is prone to hurricanes, and property insurance policies in the state often include a separate deductible specifically for hurricane-related damage. This deductible is typically higher than the standard deductible and is applied before the insurance company issues any payment for hurricane damage.

#2. Time Limitations for Filing Claims

Florida law sets time limitations for filing property insurance claims. Generally, a claim or reopened claim must be filed within 1 year after the date of loss, and a supplemental claim must be filed within 18 months after the date of loss.

#3. Changes in Legislation

The Florida Legislature has made changes to property insurance laws in recent years, which may impact policyholders. For example, Senate Bill 2A passed in December 2022, introduced sweeping changes to the property insurance claims process, reinsurance, and regulation of insurance companies.

#4. Limitations on Recovery of Real Property

Florida law sets limitations on actions for the recovery of real property. These limitations vary depending on the type of action and the court involved. For example, an action on a judgment or decree of a court of record in Florida must be commenced within 20 years, while an action on a judgment or decree of a court not of record must be commenced within 5 years.

#5. Insurance Contract Terms

The terms of an insurance contract can also impose limitations on coverage. It is important for policyholders to carefully review their insurance policies to understand the specific limitations and exclusions that may apply.

#6. Sinkhole Coverage Limitations

Florida is known for its sinkhole activity, and property insurance policies in the state may have specific limitations on sinkhole coverage. Some policies may only provide coverage for catastrophic ground cover collapse, which is a more limited form of sinkhole coverage compared to comprehensive sinkhole coverage.

#7. Windstorm Coverage Exclusions

While Florida property insurance covers wind damage, certain policies may have exclusions for certain types of windstorms. For example, some policies may exclude coverage for wind damage caused by named storms or hurricanes.

#8. High Premiums

Due to the high risk of natural disasters in Florida, property insurance premiums in the state can be significantly higher compared to other regions. This can pose a financial burden for homeowners, especially those in high-risk areas.

#9. Coverage Gaps for Water Damage

Florida experiences frequent water-related issues such as flooding, water intrusion, and mold growth. However, property insurance policies may have limitations or exclusions for water damage, which can leave homeowners vulnerable to potential losses.

#10. Policyholder Obligations and Requirements

Florida property insurance policies may have specific obligations and requirements that policyholders must adhere to to maintain coverage. For example, policyholders may be required to take certain preventive measures, such as installing storm shutters or maintaining their property in a specific manner.

Florida Property Insurance Crisis

The property insurance market in Florida has been facing a crisis due to several factors. The Florida property insurance crisis is a complex issue with multiple interrelated factors. The combination of fraudulent lawsuits, high claim risk, insurer insolvencies, rising premiums, and the impact of climate change has created significant challenges for homeowners and insurance companies alike.

#1. Fraudulent Lawsuits and High Claim Risk

One of the major contributors to the crisis is the prevalence of fraudulent lawsuits and the high overall claim risk in Florida. Insurance companies have experienced significant net underwriting losses, with some reporting losses of over $1 billion for consecutive years.

#2. Insurer Liquidations and Withdrawals

The Florida insurance market has witnessed a significant number of insurer liquidations and voluntary withdrawals. Since 2017, eleven property and casualty companies offering homeowners insurance in Florida have liquidated, with five of them liquidating in 2022 alone. Other companies have chosen to non-renew policies, tighten eligibility requirements, or request substantial rate increases.

#3. Rising Premiums

The property insurance crisis has led to a substantial increase in insurance premiums for Florida homeowners. Average annual property insurance premiums in Florida have risen to more than $4,200, which is three times the national average.

#4. Impact of Climate Change

Florida’s vulnerability to climate change, including the increased frequency and intensity of hurricanes, has further exacerbated the property insurance crisis. The risks associated with climate change have led to higher insurance costs and reduced availability of coverage in certain areas.

#5. Impact on Homeowners and Real Estate Market

The property insurance crisis has made home ownership unaffordable for many Floridians. Homeowners are struggling to find affordable coverage, and some are considering selling their homes or moving out of the state. The crisis has also affected the real estate market, with potential buyers facing difficulties in securing property insurance, even for new properties.

#6. Legislative Efforts

The Florida government has taken steps to address the property insurance crisis. Bipartisan legislation has been enacted to crack down on bad-faith lawsuits filed against insurance companies and implement consumer protection measures. These efforts aim to stabilize the insurance market and provide relief to homeowners.

#7. Insurer Insolvencies and Cancellations

The Florida insurance market has experienced insurer insolvencies and cancellations, with several insurance companies going out of business or pulling out of the state. This has resulted in reduced competition and fewer options for homeowners, leading to higher premiums and limited availability of coverage.

#8. Limited Coverage Options

The property insurance crisis in Florida has resulted in limited coverage options for homeowners. Many insurance companies have reduced their coverage areas or stopped writing new policies altogether, leaving homeowners with fewer choices when it comes to finding affordable and comprehensive coverage.

#9. Rate Increases and Non-Renewals

Homeowners in Florida have experienced significant rate increases for property insurance. Insurance companies have also chosen not to renew policies or have imposed stricter eligibility requirements, leading to policy non-renewals for some homeowners. This has created uncertainty and financial strain for many residents.

#10. Impact on Small Businesses

The property insurance crisis has also affected small businesses in Florida. Rising insurance costs and limited coverage options have made it challenging for small business owners to obtain affordable and adequate property insurance. This can hinder their ability to operate and grow their businesses.

New Florida Property Insurance Law

The Florida Legislature has passed new property insurance laws to address the ongoing property insurance crisis in the state.

New Florida property insurance laws are:

#1. Senate Bill 2A

The Florida Legislature passed Senate Bill 2A during a special session in December 2022. This bill introduces sweeping changes to the property insurance claims process, reinsurance, regulation of insurance companies, and more. These changes aim to address the issues contributing to the property insurance crisis and stabilize the insurance market.

#2. Consumer Protection Legislation

Governor Ron DeSantis signed consumer protection legislation to address the challenges in Florida’s insurance market. The legislation aims to create a healthy insurance market that offers a wide array of consumer choices, competition on price and coverage options, and financially strong insurers capable of promptly paying claims.

#3. Reforms to the Claims Process

The new property insurance law includes reforms to the claims process. It requires insurance companies to provide policyholders with a reasonable explanation if they deny or partially deny a claim. It also provides consumers with greater access to information during the claim adjustment process.

#4. Mitigation and Retrofitting Programs

The law allocates funds for programs aimed at mitigating property damage and making homes more resistant to hurricanes. For example, the My Safe Florida Home Program provides grants to homeowners for hurricane retrofitting, which can result in premium discounts for participants.

#5. Limiting Frivolous Claims

The new law includes provisions to limit the assignment of attorney fees in property insurance cases, and disincentivizing frivolous claims. This aims to reduce the costs associated with such claims and create a more balanced system.

#6. Reinsurance and Financial Stability

The law addresses the issue of reinsurance, which is essentially insurance for insurance companies. It authorizes a reimbursement layer of reinsurance for hurricane losses to assist policyholders. This helps protect insurers and policyholders in extreme situations, such as hurricanes.

#7. Focus on Policyholder Benefits

The goal of the new property insurance law is to benefit policyholders and ensure they have access to affordable and reliable coverage. The legislation aims to strike a balance between protecting policyholders’ rights and maintaining a viable insurance market.

#8. My Safe Florida Home Program

The law allocates $150 million for the My Safe Florida Home Program, which provides grants to Florida homeowners for hurricane retrofitting. By making homes safer and more resistant to hurricane damage, participants in the program may be eligible for premium discounts.

#9. Prohibition of Coverage Denial Based on Roof Age

Insurance companies are now prohibited from denying coverage solely based on the age of a roof if the roof is less than 15 years old or if it is determined to have at least 5 years of useful life remaining. This provision aims to ensure that homeowners are not unfairly denied coverage based on the age of their roofs.

#10. Reasonable Explanation for Claim Denials

The new law requires insurance companies to provide policyholders with a reasonable explanation if they deny or partially deny a claim. This provision enhances transparency and ensures that policyholders have a clear understanding of the reasons behind claim denials.

How Much Is Property Insurance In Florida?

The average cost of a home insurance policy in Florida is around $4,218 per year, which is nearly $1,441 more than the national average of $2,777. These averages are based on certain coverage parameters, such as $300,000 dwelling coverage. The cost of property insurance in Florida can vary depending on several factors, including the location, size, age, and value of the property, as well as the coverage limits and deductibles chosen by the policyholder.

What Property Insurance Companies Are In Florida?

These are the property insurance companies that are active in Florida. These include Universal Insurance Holdings Inc., Citizens Property Insurance Corp., State Farm, Tower Hill, Federated National Insurance Company (FedNat), and Heritage Property & Casualty Insurance Company.

What Is Florida Home Insurance?

Florida home insurance is an insurance coverage specifically designed to protect homeowners in the state of Florida. It provides financial protection against various risks and perils that can damage or destroy a home, its contents, and other structures on the property. Home insurance policies in Florida typically cover perils such as fire, smoke, explosions, lightning, hail, windstorms, theft, vandalism, and damage from vehicles. Home insurance policies in Florida usually include coverage for the dwelling itself (structure), other structures on the property (such as fences or sheds), personal property (contents), liability protection, and additional living expenses in case the home becomes uninhabitable due to a covered loss.

Why Is Florida Property Insurance So High?

The high cost of property insurance in Florida can be attributed to several factors. These include the state’s high risk of natural disasters, such as hurricanes and flooding, which increase the risk for insurance companies. Insurance fraud, rising construction costs, limited availability of insurance companies, and rising interest rates also contribute to the high premiums.

How Much Is Insurance For One Person In Florida?

The cost of insurance for one person in Florida varies depending on the type of insurance. On average, health insurance can start at around $177 per month, car insurance can range from $1,128 to $3,183 per year, property insurance can vary based on factors such as location and coverage limits, and workers’ compensation insurance rates depend on the industry and other factors.

How Much Insurance Is Required In Florida?

In Florida, the insurance requirements vary depending on the type of insurance. Auto insurance requires a minimum of $10,000 in Personal Injury Protection (PIP) coverage and $10,000 in Property Damage Liability (PDL) coverage. While health insurance is not mandated by the state, it is recommended. Property insurance is not legally required, but highly recommended for homeowners. Workers’ compensation insurance is required for certain industries, and flood insurance is mandatory for high-risk flood areas with government-backed mortgages.

Conclusion

Policyholders should be aware of these restrictions and review their policies to ensure they are covered effectively. Florida’s property insurance market is facing a crisis due to fraudulent lawsuits and other claims and this crisis has led to significant losses for insurance companies, increased premiums for homeowners, and reduced coverage availability. Florida’s Senate Bill 2A addresses the ongoing property insurance crisis by introducing changes to the claims process, reinsurance, and insurance company regulation. Also, My Safe Florida Home Program, which provides grants for hurricane retrofitting, is included. Florida homeowners face increased insurance rates, policy non-renewals, and financial strain.