Home Insurance rate increases not just a Florida problem

They are all just catching up with Florida, Texas and California that have had a home insurance crises for the past 15 years. Not so much climate shock but attorney and free roof shock. Attorneys are much more involved with collecting claims on roofs and water pipes than they were years ago.
Sinkholes in Florida about 12 years ago, but have run it's course and coverages are much more limited these days. That is why the sinkhole attorney billboards are gone. Of course the homes built in the 50's and 60's had galvanized water pipes and cast iron waste pipes that have reach their life span and insurance companies are getting stuck replacing them.
Insurance companies have had to pay replacement on complete re-roof jobs for 20 year old roofs with a few shingle blown off or some hail damage. Of course a 20 plus year old shingle is easy to damage.
Much of this has happened because the insurance companies in years past added coverages and replacement cost to the original fire and wind policies of old.

 

Get ready for climate change penalties. Depending on what state you live in, you'll pay upwards of 60 to 120% more on insuring everything. In 3 states alone, the insurance premium will be so high, you will repurchase your house in its entirety in a decade. I have to look at our local and state laws to see if we can terminate our insurance and take that premium and save it in a CD so that in 10 year's time we'll have saved up enough to rebuild our home. Who needs insurance if you can just save the premium over a decade? I am close to terminating the duplex in Pensacola because next year I'll have paid 50% in insurance premiums than the original price I paid for back in 2010. No claims either. And the premium is still going up every year. Currently half the annual premium of our 7 acre ranch in Alabama for a 900 sq ft 2 br 2 ba single-level apartment.

Here's what I think will be the tipping point - people will no longer want expensive homes. They either will buy much smaller homes or rent large homes. Now renting has its own set of issues - the landlord who has to pay for the dwelling insurance may just pass on the premium to the renter. As a renter, you still need renter's insurance unless you don't have anything to insure. That leaves smaller, cheaper homes, less than half the size of the average home in America. Maybe the double-wide may become the more popular choice.

 

This struck me from one of the articles linked above saying it was litigation that is the primary issue from terrible laws:

Insurance litigation exploded, with the recent industry report finding that Florida accounted for 7% of all homeowners insurance claims — roughly comparable to its share of the US population — but 76% of all lawsuits involving homeowners policies. Insurance companies normally pass on higher costs to customers, and premiums began to spike in 2020. A 2021 report by Guy Fraker of the James Madison Institute estimated that litigation costs alone cost the typical Florida family an extra $487 per year in 2019, with an annual growth rate of 26%. That “hidden tax” would be more than $1,200 per family in 2023.

 

The state does not care if you have insurance coverage. If you have a mortgage they will care. Of course you should still by liability on the property you own as it is worth what it cost 10 times over. If you save the premium for a couple of years and then have a total loss you will be way upside down. That said if you have enough money saved and different properties you will most likely do okay unless you just hit a bad streak of luck. The premiums in Central Florida and even in places like Tampa are no where close to matching home values over a 10 year period. I am sure the home you insure in Pensacola is insured for much more than you paid for it 15 years ago and could not be replaced for the cost 15 years ago either.

 

You are not required to insure your home in Florida unless there is a mortgage and they require it. I owe less than 100K on my home and will pay it off and cancel my insurance and buy specific insurance if available. My buddy lives on the inter coastal in St. Pete and hasn’t had insurance at any time. He’s in a small block home and says the insurance premiums he’s saved would more than build a similar new home. All he needs is enough room for him and his wife. He has significant savings from putting the insurance premiums into investments.

What I’m curious about is the insurance bump in the states that have been getting hit with tornadoes that appear more numerous and stronger than before?

 

I think they do have an interest in people having insurance coverage, they probably don't want to be in the insurance business themselves or have the total burden of disaster relief.

 

There is no requirement in Florida to carry any insurance on your home. If you have a mortgage federal law will require you to carry flood in you are in a 100 year flood plain. The mortgage company will also require a wind and fire policy or homeowner policy as well as flood in you are in the 100 year flood plain.

 

It will start to get better in Florida. We are starting to get some carriers back in the state. I dont think we will see policies go down but it should slow how much the increase each year.

 

That's because we (at least for now) have a large private insurance market where insurance is ostensibly affordable for a homeowner. No reason to require what is easily obtainable for most people. But I guarantee the state doesn't want a situation where private insurance becomes basically unaffordable and people have no way of protecting their most valuable asset and big chunk of the population doesnt have insurance when a disaster hits. Then it becomes a problem for the government, not private insurers with cash reserves. In that way they do "care" that you have insurance. They dont require because only a small number of people are going to self-insure when coverage is relatively affordable.

 

Since many of you guys live in Florida, what are the thoughts on National Flood Insurance program? I wonder if any of our resident MAGAs use it, because it seems like a form of socialism.