Florida’s insurance market has been in a meltdown mode for several years now and this is prior to last week’s historic landfall on southwest Florida from Hurricane Ian. Unfortunately, the category-4 storm packed 155-mph winds and brought upon a record storm surge. What many may not realize is that six insurers have been declared insolvent so far this year and this was before Hurricane Ian, in what had been a relatively calm hurricane season. As a result, annual insurance rates in the Sunshine State are three times the national average at $4,231.
Tallying up the damage
Hurricane Ian will likely rank highly among one of the costliest storms to hit the United States. Here are some of the costliest storms to have hit the U.S. (in 2021 dollars):
- #1. Hurricane Katrina: $89.7 billion
- #2. Hurricane Ida: $36 billion
- #3. Hurricane Sandy: $35.1 billion
- #4. (tied) Hurricane Harvey: $33 billion
- #4. (tied) Hurricane Irma: $33 billion
It has been estimated that Hurricane Ian-related losses will likely come in somewhere between $25 billion and $40 billion. As for how much of this bill will be covered by Floridians is yet to be determined. With this said, the federal government has announced that it would help cover insurance gaps for damaged homes, up to $37,900, as well as up to another $37,900 for “lost property.”
Needless to say, the future of Florida’s property insurance market is uncertain at best. Unfortunately, years of fraud and abuse have certainly caused a lot of damage to not only the insurance companies, but ultimately the policyholders paying for this fraud in the form of higher premiums. One area in particular that has been exploited is the “assignment of benefits” provision. In particular, we have seen many roofers exploit this by offering to conduct free roof inspections. When conducting these roof inspections, many of these roofers will even go as far as to damage the roof just so that they may submit a claim to the insurance company. This has been going on for quite some time and has resulted in higher premiums for all policyholders. As a homeowner, it is simple. If a roofer approaches you about conducting a free roof inspection, don’t allow them to do it.
Another area that needs to be addressed is to change tort laws to reduce litigation. At the present time, many insurance companies have to spend an incredible amount of money to defend against the settlement of claims. This can be an impediment for the insurance companies because it ties their hands.
If there is anything to learn from the recent impact from Hurricane Ian, it is that we must always have a hurricane plan in place to ensure our safety and secure our property. In addition, it is wise to plan for the worst case scenario when obtaining insurance coverage for your property. It is amazing how quickly a devastating storm can destroy your biggest investment.
Are you thinking about buying or selling real estate in South Florida? We can help. Contact Natasha at Live South Florida Realty, Inc. today! While you are at it, be sure to download the free Florida Home Search app as well.