6 Reasons Florida Home Insurance is so Expensive

Why Home Insurance So Expensive in Florida and a Reason for Hope

January 12, 2025

Florida is often celebrated for its sunny weather, stunning beaches, and vibrant lifestyle. However, when it comes to home insurance, it’s also infamous for sky-high premiums. If you’re a Florida homeowner, you’ve felt the pain of opening your policy renewal.

But why exactly is home insurance so expensive in the Sunshine State?

Read to find out why auto insurance is so expensive in Florida.

1. Frequent and Severe Hurricanes

Florida’s geography makes it especially vulnerable to hurricanes and tropical storms. With most of the state surrounded by water, the risk of severe weather is a constant concern. Hurricane damage, which includes wind and flooding, often leads to billions of dollars in claims each year. Insurance companies spread these costs across all policyholders, leading to higher premiums statewide.

Hurricane Milton prompted 173,000 insurance claims which comes with a price tag of BILLIONS of dollars for insurance companies. It will be some time before the final numbers are tallied, but current estimates have the damages at around $36 billion.

2. Rising Reinsurance Costs

Reinsurance is insurance for insurance companies. It helps them cover massive payouts after major disasters like Hurricane Milton. Because of Florida’s high risk of hurricanes, reinsurance costs have skyrocketed. These costs are passed down to homeowners, contributing significantly to the overall cost of premiums.

3. Fraud and Litigation Issues

Florida has been plagued by an increase in insurance fraud and excessive litigation. Some homeowners and contractors file inflated or fraudulent claims, often involving roof replacements or water damage. Additionally, the state’s legal climate encourages lawsuits over disputed claims. Insurers raise premiums to account for these legal and fraudulent expenses, making honest homeowners pay the price.

Assignment of Benefits Abuse in Florida

Contractors, auto repair shops, roofers, etc., have the insureds sign a document that gives the third party (contractor or roofer) the right to seek direct payment from the insurance company on the policyholder’s behalf.

In other words, roofers can get you to sign this document after a storm and tell you, “we’ll take care of the insurance company.” If they submit an inflated number to the adjuster and the insurance company disputes it, the contractor can file a lawsuit against the insurance company.

One-Way Attorney’s Fees

If a policyholder won a lawsuit against an insurer in Florida, the insurance company was required to pay for their attorney’s fees. Insurance companies were still required to cover their own legal expenses regardless of who won the case.

If a contractor submitted an inflated number and the insurance company actually pulled away from court with a victory, the contractor had no risk of having to pay for the insurance company’s legal fees.

AOB and One-Way Attorney’s Fees have been credited with helping create a crisis in the state of Florida due to unchecked litigation costs for insurance companies.

These two issues created an expensive scenario in the state of Florida. Fraudulent, assignment of benefits claims and frivolous lawsuits ran amuck.

Are insurance lawsuits in Florida really that big of a deal?

The state of Florida accounts for just 9% of homeowners’ insurance claims filed in the country, yet Florida accounts for 79% of the nation’s homeowners’ insurance lawsuits.

In April of 2022, Governor DeSantis announced a call for a special session to address these issues. In the 10 years leading up to that, insurance companies in Florida had paid out $51 billion. Of that $51 billion, 71% went to attorneys’ fees and public adjusters. Just 8% went to you, the policyholders.

Florida finally put an end to AOB and One-Way fees at the end of 2023. I’ve already heard from some home insurance companies that there is a sense of optimism they will be able to re-assess rates and produce more competitive policies. There are enough risks to account for in Florida, the risk of litigation is one of the most expensive ones.

Agent’s Take: For the most part, insurance companies I have worked with have paid the claims they were supposed to pay. They are obligated by law to pay claims they should obviously pay. I have also seen plenty of instances of attorneys or crooked contractors trying to leach off of insurance companies. I’ve seen roofers file claims on roofs that didn’t have damage. I’ve seen attorneys convince people they need to be brought in BECAUSE you have a claim and the insurance company will try to put one over on you.

I can tell from my experience with attorneys, they’ve slowed the process down to the point that it took YEARS to get a simple claim resolved. It became a legal issue and there wasn’t anything I could do as the agent.

The insurance company had to pay extensive legal fees. The clients were left in limbo for years and they were naturally very unhappy. And the attorneys got paid exorbitant amounts of money for their time. Who really won there?

I’m not discouraging seeking the assistance of an attorney. But watch out for the blood-sucking scum of the earth in every industry. Contractors, attorneys, and insurance companies is quite the trifecta. Just remember that number, 8% of insurance payouts went to you the people over the past 10 years. Policyholders have been getting very little of the actual payouts but are the ones who get the bill with increased premiums.

Here’s to hope that the new laws will positively impact our absolutely ridiculous premiums in Florida.

4. Florida Flood Risks and Additional Flood Policies

While hurricanes contribute to high insurance costs, many policies don’t include flood damage—requiring homeowners to purchase separate flood insurance policies. In flood-prone areas, these additional policies can cost thousands of dollars annually, further straining household budgets.

If you need additional flood insurance for your home, contact us.

5. High Property Values and Construction Costs

Florida’s booming real estate market has driven up property values. Higher home values mean more expensive claims when properties are damaged or destroyed. On top of that, rising construction costs make rebuilding after a disaster more expensive, increasing the cost of claims and, consequently, premiums.

To put the sky-rocketing value of home prices into perspective, Sarasota medium sale prices for houses has gone from around $300K in May of 2020 to 650K in November of 2024.

6. Reduced Competition in the Market

Many national insurers have pulled out of Florida due to the risks and financial challenges of operating in the state. This leaves fewer options for homeowners, allowing remaining insurers to charge higher premiums. The lack of competition makes it difficult for consumers to shop around for better rates.

In the past three years, over 30 home insurance companies have pulled out of the state or went insolvent. All of the reasons above (particularly sky-high litigation costs and severe weather) have led to a non-competitive market. Most companies don’t want to win business in Florida, in fact they are deciding not to even do business in Florida.

This is a mess that’s creating another mess. The mess of litigation costs and natural disasters is creating a market disaster for consumers.

Luckily there are some local or lesser-known companies that are attempting to step in and seize potential opportunities in the Florida markets. We work with companies like that at Carter Family Insurance. Request a quote in the form below and keep reading.

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What Can Florida Homeowners Do?

While you can’t control hurricanes or market conditions, there are steps you can take to manage your home insurance costs:

Shop Around: Compare rates from multiple insurers to find the best deal. An independent agent (like us) can do the shopping for you since we work with several different carriers.
Bundle Policies: Combining home and auto insurance can lead to discounts.
Fortify Your Home: Installing hurricane shutters, impact-resistant windows, and a stronger roof can lower your premiums.
Ask About Discounts: Some insurers offer discounts for alarm systems, wind mitigation, or loyalty.
Stay Informed: Work with an insurance agent to understand your policy and ensure you’re not paying for unnecessary coverage.

Florida’s unique risks and challenges make home insurance expensive, but understanding the reasons behind these costs can help homeowners make informed decisions. If you’re feeling overwhelmed by high premiums, consider consulting with an experienced insurance agent to explore cost-saving strategies tailored to your needs.

Need Help Finding the Right Insurance?
At Carter Family Insurance, we specialize in helping Florida homeowners navigate the complex world of insurance. We are an independent insurance agency serving Sarasota, Bradenton, and all of Florida.

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Why Home Insurance So Expensive in Florida and a Reason for Hope

Table of Contents

1. Frequent and Severe Hurricanes

2. Rising Reinsurance Costs