If you live in Florida, it’s important to understand what’s been happening with property insurance here. As of January 1, 2023 several big changes went into effect following special legislative sessions. These sessions were called to address the property insurance premiums rising across Florida.
First, let’s talk about some of the things that make Florida a unique market for property insurance. Our geography sets us apart from the rest of the continental U.S. No other place is as likely to receive significant damage from hurricanes and tropical storms. Since 2017, the frequency of heavily damaging storms has increased statewide (even if we’ve been relatively protected here in Miami). As a result, insurance companies have paid out significantly more claims in both quantity and total cost.
As insurance companies start losing money, they start raising rates. When that wasn’t enough to stem the flow of their losses, some began leaving the state entirely. More and more property owners were having difficulty finding any insurer to cover their homes and Citizens – the state-run insurance carrier for Florida residents – had a surge in insured properties.
The beginning of this year saw some big changes. First, the creation of the Florida Optional Reinsurance Assistance Program, or FORA. This billion-dollar fund is designed to be a financial safety net for insurance companies. This protection creates some built-in stability even if they have to pay out a large number of high cost claims due to a hurricane or other costly storms.
New laws have put claims on a faster track. You now have less time to file a claim – one year rather than two. Insurance companies will have less time to process claims and must make their decisions in 60 days rather than 90 days. Insurers also have to complete any on-site inspections within 30 days, whereas they had 45 days in the past.
Property owners who are currently insured by Citizen’s Property insurance will be required to buy flood insurance, even if your home is not in a FEMA flood zone. Additionally, they will have to accept a private policy as long as it is not more than 20% higher than their Citizen’s policy. This is an effort to shift Citizen’s back to its intended role as a last resort insurer, rather than the first choice for many property owners.
You can expect rates to go up. The goal of these changes isn’t to cost you more, but to incentivize property insurance companies to return to the Florida market. We are hopeful that by the end of 2023 we will start to see more competitive pricing, and that that trend will continue into 2024. We’re happy to help you navigate these changes as they relate to buying or selling property. The Kern Team has a healthy network of professionals and can offer you recommendations for insurance experts should you need one. Reach out to us today.