Why Is Florida Homeowners Insurance Getting So Expensive?

Florida has long been considered a highly desirable place to live, and for a few reasons. It has warm weather, no state income tax, and there are several metropolitan areas where the cost of living is well below the national average.

However, there is one expense that has been rising rapidly that has started to make many people think twice about moving to the Sunshine State -- homeowners insurance. While we don't have finalized 2023 figures, early projections found that insurance rates could increase by as much as 40% in 2023 alone, and that would be on top of a 33% increase in 2022. The average homeowner in Florida is paying nearly $6,000 for their property insurance, more than three times the U.S. average.

Why is Florida homeowners insurance so expensive?

To be sure, Florida isn't the only place where homeowners insurance rates have been increasing. The first key reason for the higher insurance prices that have affected homeowners throughout the United States: inflation. Think of it this way. If a tree falls on your house, it costs the insurance company more to pay for the repairs than it would have just a couple years ago. In order for the insurer to remain profitable, the additional costs of providing coverage are passed on to the consumer (you).

The second major reason why Florida's homeowners insurance premiums are so high is the state's vulnerability to severe weather events, particularly hurricanes. There have been several major storms in recent years, which have proven to be very costly to insurers. Hurricane Ian in September 2022 caused an estimated $60 billion in insurance losses alone.

One thing non-Floridians don't realize is that in disaster-prone areas, you might need more than one type of property insurance. If you live in a coastal area, you'll likely need a separate windstorm policy. And if you're in a low-lying area, you'll also need a flood insurance policy. My first home was located in South Florida just a few blocks from the water and only five feet above sea level. My property insurance costs were nearly $1,000 per month. And this was almost 15 years ago. That's a big reason why I didn't keep that house for long.

Finally, and this is tied into the second reason, many insurers have left Florida in recent years due to rising costs and the uncertainty involved with natural disasters. This has created fewer options for homeowners, and less competition is typically not conducive to falling prices.

How to save money on Florida homeowners insurance

While you're not likely to find homeowners insurance in Florida that costs less than the national average, there are some things you can do to make sure you aren't paying more than you need to.

One simple thing that far too many homeowners don't do is shop around with home insurers. Sure, shopping around for insurance and changing your coverage (especially if it's paid through your mortgage company) can be a hassle, but it doesn't take long to get some quotes and you might be surprised at what you can save. Make sure you aren't sacrificing coverage, and that your limits and deductible are appropriate for the home.

Some insurers offer unique discounts, such as for being a graduate of a certain university, so it is definitely worth comparison shopping every few years. Another strategy is to see if an insurance company you already do business with also offers homeowners insurance, as some will offer bundling discounts.

Alternatively, if you could handle a higher deductible, it could be worth comparing what your current policy costs with a few higher-deductible options.

The bottom line is that Florida's homeowners insurance rates have spiked higher in recent years, and as of this writing, there is little relief in sight. But by shopping around, looking for discounts, and considering higher-deductible policies, you might be able to save significant money.