How Florida’s Home Insurance Market Became So Dysfunctional

Florida’s beautiful beaches and sunny lifestyle come at a cost—homeowners now face some of the highest insurance premiums in the country, averaging over $6,000 a year. That’s more than triple the national average and nearly three times what Floridians paid just a few years ago.

The Hidden Problem

Florida’s insurance market is collapsing under pressure. Natural disasters are more frequent and severe, reinsurance costs are skyrocketing, and the state’s lawsuit-heavy environment makes it even harder for insurers to stay profitable. As a result, many insurers have pulled out of Florida or limited coverage, leaving residents with fewer—and more expensive—options.

Why It Matters

For homeowners, rising costs and shrinking options can mean the difference between keeping or losing their homes. When insurers leave or fail, families are left scrambling for coverage, often relying on Citizens Property Insurance, the state’s insurer of last resort.

What Experts Are Saying

Experts point to three major factors behind Florida’s crisis:

• Natural disasters – Hurricanes and floods cause billions in damages each year.

• Reinsurance – Insurance for insurers is more expensive than ever, and costs are passed on to homeowners.

• Litigation – Florida’s legal environment drives up costs by encouraging more lawsuits against insurers.

Real-Life Cost

Homeowners are the ones paying the price. With higher premiums and fewer insurers willing to take the risk, many families are left wondering if homeownership in Florida is even sustainable.

What’s Next for Florida?

In 2022, lawmakers passed Senate Bill 2A to reduce lawsuits and limit practices like “assignment of benefits.” While these reforms may cut costs for insurers, critics warn they could also make it harder for homeowners to fight unfair claim denials.

Bottom Line

Florida’s insurance market is at a tipping point. Without stronger reforms, costs will keep rising, insurers will keep leaving, and homeowners will be left footing the bill. Other states are watching closely—deciding whether Florida will serve as a blueprint for solutions or a warning of what not to do.

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Latisha Nixon-Jones. How Florida’s Home Insurance Market Became So Dysfunctional So Fast. March 20, 2024. This material is used under fair use for educational purposes. For the original article, see: https://www.governing.com/urban/how-floridas-home-insurance-market-became-so-dysfunctional-so-fast