Home insurance bills have been staggeringly high in Florida than any state costing up to 57%
According to new data analysis, the rates of home insurance have been rising faster in Florida, impacting the Floridians’ wallets. The costs have been higher since 2015, according to a data analysis company LexisNexis Risk Solutions.
The 57% cost is triply the US average of 21% and far exceeds Nebraska – the state known for the 2nd biggest home insurance, i.e., 43%.
Here’s what’s causing this home insurance hike.
Climate change is partly to blame
The altered atmosphere and warming oceans are causing rapid and intense hurricanes. Hurricane Irma in 2017, followed by Hurricane Michael in 2018 and Hurricane Ian in 2022, has hit Florida, causing $200 billion worth of damages.
Recent storms have rendered many Florida insurers insolvent. Hence, statewide premiums are increasing, notes the head of Florida strategy Chris Dittman at Aon Reinsurance Solutions. He recalled disastrous events that have hit Florida in the last six years.
The insurance market was already shaky, and the hurricanes inflicted more strain. Six insurers were pushed to insolvency before Hurricane Ian since they couldn’t comply with pay-out claims. Other companies decided to exit Florida entirely.
However, climate change isn’t solely to be blamed. Other factors, such as rising inflation, have increased the material and labor costs for house rebuilding or repair. With higher interest rates, borrowing cost has also risen for reinsurance and insurance companies.
People are building expensive homes along eroding coasts and vulnerable floodplains, which concentrates insurance risk. All these mundane causes have led up to Florida’s insurance crisis, hence, driving up living costs for renters and homeowners.
Flood insurance rates aren’t behind either
Besides hurricanes and rising inflation, flood insurance rates are also increasing faster than ever, according to FEMA (Federal Emergency Management Agency) running the National Flood Insurance Program.
The figure is estimated to increase immediately following state law requiring citizens with home insurance to also buy a flood insurance policy. Citizens will face a premium of up to 131% on average under the new Risk Rating 2.0 system.
However, flood insurance will mitigate some of the risks for Floridians as the state’s flood rate hikes are 6th biggest. The residents of Sunshine State will only pay the 8th highest flood insurance rates as the new prices come into effect. The average policy will cost $2,213 compared to the $3,653 Hawaiians will pay.
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