Homeowner’s Insurance Premiums on the Rise

In this week’s blog, I take a look at what is going on with homeowners insurance.  I previously ran a blog last June about my quest to find a lower homeowner’s insurance premium because of our home’s aging roof. And I was able to get our premium lowered because of a wind mitigation inspection. 

But… this week alone, two FAR  articles appeared about homeowner’s insurance.  I asked my insurance agent Kevin Hewitson for his thoughts.  I include his comments.  

Based on a Wall Street article, the Florida Association of Realtors reports some homeowners who are taking the middle ground to save on insurance. Rather than a drop property insurance altogether,  some owners are choosing to increase their deductibles to lower their premiums. And that comes with some risks. It means that when theft, fire or other damage is occurred to their property policy holders will have to pay a larger portion of the repair or replacement bill. Typically homeowners have deductibles on standard policies that range from $500-$1000. The hurricane deductible is separate and usually much higher,  Read the full article.

direct link to article:More Owners Take Middle Ground to Save on Insurance | Florida Realtors

Another FAR article reports (based on an  Associated Press Article)  that Climate Change is causing problems for insurance: 

“A growing number of Americans are finding it difficult to afford insurance on their homes, a problem only expected to worsen because insurers and lawmakers have underestimated the impact of climate change”, a new report says.

A report from First Street Foundation released Wednesday says states such as California, Florida and Louisiana, which are prone to wildfires and damaging storms and flooding, are likely to see the most dramatic increases in premiums. But the fire that destroyed the Hawaiian community of Lahaina on Aug. 8, as well as the historic flooding that happened in Vermont and Maine in July, are examples of events that could drive up insurance costs for homeowners in other states.

“If you’re not worried, you’re not paying attention,” said California Sen. Bill Dodd, whose district includes the wine-country counties devastated by the LNU Complex fires in 2020.

First Street estimates, factoring climate models into the financial risk of properties in its report, that roughly 39 million properties – roughly a quarter of all homes in the country – are being underpriced for the climate risk to insure those properties. 

Read the Full Article:Not Just Fla.- 25% of U.S. Facing Unaffordable Insurance | Florida Realtors

I contacted my homeowners insurance person Kevin Hewitson for him to comment on what is going on in the insurance industry today, below are his are his comments. 

The Escalating Cost of Home Insurance in Florida and Across America

By Kevin Hewitson, Insurance Agency Owner in Citrus County

If you’re a homeowner in Florida, like me, you’ve likely noticed the sharp increase in home insurance premiums in recent years. However, this problem extends beyond the Sunshine State, affecting a staggering 25% of homeowners across the United States. In this article, I’ll delve into the reasons behind the rising cost of home insurance in Florida and offer guidance on navigating these insurance challenges.

Florida’s Complex Insurance Landscape

Florida is indeed a paradise. Yet, it’s also known for its vulnerability to natural disasters, particularly hurricanes. This geographical risk factor has prompted insurance companies to charge higher premiums. Let’s explore the key contributors to this issue:

1. Hurricane Vulnerability: Situated in the hurricane belt, Florida faces the annual threat of tropical storms and hurricanes. Insurance providers factor in this elevated risk when calculating premiums.

2. Expensive Reinsurance: To shield themselves from catastrophic losses, insurance companies purchase reinsurance. The surge in global natural disasters has driven up reinsurance costs, which inevitably trickle down to policyholders.

3. Assignment of Benefits (AOB) Abuse: Florida grapples with AOB abuse, where contractors assume control of homeowners’ insurance claims. This practice often leads to inflated claims, putting upward pressure on premiums for all policyholders.

4. Litigious Culture: The state has witnessed a surge in insurance-related litigation, especially concerning water damage and hail claims. Legal fees and court costs inflate the overall expenses borne by insurance providers, influencing premium rates.

5. Growing Demand: As more individuals migrate to Florida, the demand for homeowners’ insurance has surged. The sheer volume of policies has compelled insurers to raise premiums to manage increased risk.

Seeking Solutions and Optimism

Addressing the escalating cost of home insurance necessitates collaboration among homeowners, insurance firms, regulators, and policymakers. Potential solutions include:

• Mitigation Measures: Homeowners can invest in home mitigation practices to reduce risk and lower premiums. 
• Regulatory Revisions: Implementing regulatory changes that combat AOB abuse and streamline claims processing can help manage costs.
• Climate Resilience: Communities can invest in infrastructure and policies to enhance resilience against climate-related disasters.

If you’re a Florida resident looking for guidance or assistance with your insurance needs, please feel free to reach out to me at kevinhewitson@allstate.com or 352-563-2323.Together, we can work towards finding insurance solutions that safeguard your most valuable asset.