Insurance Costs Threaten Fla. Real Estate Boom
Homeowners across the state have experienced double-digit rate increases for insurance, while others have received notices that their policies will not be renewed.
TALLAHASSEE, Fla. – Mounting insurance losses and rising premiums in Florida's property-insurance market are threatening the state's booming real estate market, according to insurance executives and industry analysts.
Homeowners across the state have experienced double-digit rate increases for insurance, while others have received notices that their policies will not be renewed. Insurers are cutting back coverage in certain geographic areas as hurricanes Irma and Michael caused $30 billion in losses, driving up the cost of reinsurance, and excessive litigation over insurance claims and a proliferation of what insurers see as sham roof-related claims continue to be an issue.
The Insurance Information Institute estimates that Florida residents are projected to pay on average $2,380 in premiums this year, a 21% increase over the $1,960 paid in 2018. By contrast, the average American homeowner is expected to pay $1,297 this year, up 4% from $1,249 in 2018.
Though Florida's real estate market remains strong, spiraling insurance premiums could hobble it, real estate agents say. Some out-of-state buyers streaming into Florida say they are stunned by their insurance bills.
Ricardo Calina, a former Wisconsin resident who closed on a house in Winter Garden in January, said he was upset to learn he and his wife would pay roughly 25% more in homeowners insurance, even though the 4,500-square-foot Florida property is 500 square feet smaller than their Wisconsin residence.
Source: Wall Street Journal (04/25/21) Scism, Leslie; Campo-Flores, Arian
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