For years, Florida lawmakers said changing the state’s insurance laws would help lower home insurance costs. One of the biggest goals of the new laws was to reduce lawsuits between homeowners and insurance companies.
Today, the number of lawsuits has dropped. However, many Florida homeowners are still asking the same question:
If lawsuits are down, why is my insurance bill still so high?
The answer is more complicated than it may seem.
Florida Property Insurance Reforms Changed the Rules
In 2022 and 2023, Florida passed several major property insurance laws. Supporters of the Florida property insurance reforms argued that too many lawsuits were making it expensive for insurance companies to operate in the state.
The new laws changed when and how policyholders can recover attorney’s fees after a denied or underpaid claim. These changes made it more difficult for some homeowners to take legal action against an insurance company.
Supporters believed the reforms would reduce lawsuits, attract more Florida insurers, stabilize the Florida insurance market, and over time help create more competitive insurance rates.
The number of lawsuits did fall. However, lower lawsuit numbers have not yet resulted in major savings for many homeowners.
Lawsuits Are Down, but Insurance Rates Remain High
The reforms appear to have worked in one important way.
Florida has seen a sharp decrease in property insurance lawsuits. Florida insurers have also reported better financial results, and some new insurance companies have entered the property insurance market.
On paper, these changes look positive.
However, many Florida policyholders are still paying very high insurance rates. Some companies have requested small rate decreases, while others have kept rates mostly the same.
A small decrease may also be difficult to notice when a homeowner’s premium has already increased greatly over the past several years.
For many families, the savings they were promised have not arrived.
Why Is Florida Homeowners Insurance So Expensive?
There is no single reason Florida homeowners insurance remains expensive.
Insurance companies point to several ongoing problems, including hurricanes, severe storms, higher construction costs, expensive reinsurance and the growing cost of rebuilding damaged homes.
Even when lawsuits decrease, these other costs can continue pushing premiums higher.
Construction Costs Keep Home Insurance Expensive
Construction costs have increased in many parts of Florida. Roofing materials, lumber, windows and other building supplies may cost more than they did several years ago.
Labor costs have also increased. Contractors may charge more for repairs, especially after a hurricane or major storm when many homeowners need help at the same time.
When it costs more to repair or rebuild a home, insurance companies may charge higher premiums because they expect future claims to cost more.
Reinsurance Costs Affect Florida Insurance Rates
Reinsurance is insurance purchased by insurance companies.
Florida insurers use reinsurance to help protect themselves when a hurricane or another major disaster causes thousands of claims at once. However, reinsurance costs can be very high in Florida because the state faces a serious hurricane risk.
When an insurance company pays more for reinsurance, it may pass part of that cost to policyholders through higher premiums.
Even if lawsuits are down, expensive reinsurance can keep Florida insurance rates high.
Florida Home Values and Coverage Costs Have Increased
Many homes in Florida are now worth more than they were several years ago. However, insurance companies are not only concerned about a home’s market value. They also consider how much it would cost to rebuild the home after a total loss.
Higher labor and material prices can increase the amount of coverage a homeowner needs. When the insured value of a home increases, the premium may also increase.
This means a homeowner could see a higher insurance bill even if the insurance company did not increase its basic rate.
Citizens Property Insurance Corporation Still Plays a Major Role
Citizens Property Insurance Corporation is Florida’s state-backed insurance company. It often provides coverage to homeowners who cannot find affordable coverage through a private insurer.
Citizens has grown as many private companies have left Florida, reduced the number of policies they sell or placed stricter limits on the homes they will insure.
Florida officials have been working to move some Citizens customers to private insurance companies. However, a private policy is not always cheaper. Some homeowners may receive an offer from a private insurer with a higher premium or different coverage.
The continued importance of Citizens shows that Florida’s property insurance market is still facing serious challenges.
Insurance Regulation Does Not Guarantee Immediate Savings
Florida insurance regulation requires insurance companies to explain and support their requested rate changes. State regulators can approve, reduce or reject certain requests.
However, insurance regulation does not mean every homeowner will receive an immediate rate reduction.
Rates can vary based on many factors, including:
- The age of the home
- The age and condition of the roof
- The home’s location
- The amount of coverage
- The deductible
- Previous claims
- Wind and flood risks
- The insurance company
One Florida homeowner may receive a decrease while another homeowner sees no change or even an increase.
What Florida Homeowners Should Know About Claim Coverage
Fewer lawsuits do not mean insurance companies always handle claims correctly.
Florida homeowners may still experience problems such as:
- Delayed claims
- Underpaid claims
- Denied claims
- Disagreements about coverage
- Disagreements about the cost of repairs
- Requests for repeated inspections or documents
The reforms changed parts of the legal process, but they did not remove every right held by policyholders.
Florida policyholders may still have options when an insurance company fails to properly investigate or pay a covered claim. The available options depend on the policy, the type of damage and the facts of the claim.
Do Not Assume the Insurance Company’s First Offer Is Final
After a storm, fire, water leak or another covered loss, many homeowners accept the insurance company’s first payment because they believe they have no other choice.
That is not always true.
An insurance company’s estimate may leave out damaged areas, use lower repair prices or fail to include work required by building codes. The insurer may also disagree with a contractor about the repairs needed to restore the home.
Homeowners should review the estimate carefully and compare it with the actual damage.
If a claim has been delayed, denied or underpaid, it may be helpful to have an experienced property insurance attorney review the situation. A second opinion can help determine whether the insurance company properly handled the claim and applied the correct coverage.
Florida Insurance Reforms: Why Rates Are Still High
Florida’s insurance reforms have clearly reduced the number of lawsuits.
While some insurers have filed for modest rate decreases, many Florida homeowners have not yet experienced significant savings on their premiums.
Construction costs, reinsurance costs, hurricanes, rising home values and problems within the Florida insurance market continue to affect insurance prices. As a result, the answer to the question “Why is Florida homeowners insurance so expensive?” involves much more than lawsuits alone.
The property insurance market may be improving in some areas, but many Florida families are still paying high premiums while also facing disputes after their homes are damaged.
If you believe your insurance company has delayed, underpaid or wrongfully denied your property damage claim, speaking with an experienced property insurance attorney can help you understand your rights and available options.
Has Your Insurance Company Delayed, Denied, or Underpaid Your Claim?
You don't have to navigate the claims process alone. If your property has been damaged and you believe your insurance company has not treated your claim fairly, the attorneys at Vargas Gonzalez Delombard, LLP are here to help. We represent homeowners in property insurance disputes and can review your claim to help you understand your legal options.
Contact Vargas Gonzalez Delombard, LLP today for a free claim review.
