If you have been a homeowner in Florida over the past 5 years, it has become apparent that each year that goes by, the harder it has become to secure insurance on your home. While this is no secret, the issue has only grown exponentially worse into the year of 2022. Since 2020, 14 insurance companies have left the Florida market with many going out of business totally, or just non renewing and discontinuing the writing of policies in the state of Florida as a whole. These companies include United Property and Casualty, Federated National, Southern Fidelity, Avatar, Capital Preferred, St Johns, Bankers, Lighthouse, Gulfstream, Weston, Florida Specialty, Windhaven Insurance, American Capital, and Bedivere. We were previously worried about finding an affordable rate, and now, we are simply worried about being able to find adequate coverage.
With the decrease in the supply of carriers in the state, this has caused an increase in the pricing and the number exclusions that an insurance company will consider. It is important to know what types of policies exist, what type you will need, and what factors insurance companies look at to determine if a home will qualify for certain carriers. With that information, you can pick the upgrades to your home that make insurance more accessible and in turn offer lower rates.
The two most common policies for rental homes are the DP1 and DP3 Policies, with the DP3 being the better coverage. Read more about the differences in these policies on our blog here: Types of Insurance Policies: DP1 vs DP3 Now, that we know the types of policies, it is important to know the most common issues that insurance companies use to exclude homes or raise rates on these policies.
In Florida, the most common factor is based on the age and condition of the roof. Due to this, having a recent wind mitigation inspection showing the condition, is not only detrimental to your rates, but in nearly every situation, it is required before quoting you accurately. While the parameters will vary from company to company, most insurance companies do not write policies on homes with roofs over 15 years old. If you are lucky enough to find one, then the premiums will likely be extremely high. Our insurance experts say most premiums have raised anywhere from 25%-65% from the previous years rate on homes with 15+ year old roofs and that number is likely to increase each year. If at any point that roof is shown to have less than 5 years of life left, even if the roof isn’t actively leaking or damaged, you can expect them to require the roof to be replaced before offering a renewal..
Aside from the wind mitigation, an additional inspection known as a 4 point, has become another important factor that the insurance company will typically require, before quoting you a policy. Insurance companies tend to focus on two areas from this inspection, the electrical and the plumbing portion. By addressing those sections of your inspection, you can fix or replace the problematic parts that the insurance companies may see as an exclusion. Things like aluminum wiring, polybutylene plumbing, and lately the age of the water heater have become focal points for the carriers still writing in Florida. For that reason, it is always important to have and update wind mitigation and four point, in the event that your carrier non renews, or goes out of business. Home inspectors can provide you these reports for $200- $300. As available options dwindle and exclusions grow, it is always important to keep an eye on when your policy ends, so that you can anticipate and fix any issues that may come from a drastic rate increase or non-renewal.
By staying on top of these issues, you can give yourself the best opportunity at getting quotes from multiple companies and inevitably finding the cheapest rate for the best policy possible. For that reason, I encourage everyone to become familiar with the company your policy is written through and when that policy is ending, so that you are not caught scrambling to get a new on last minute with a list of expensive repairs that you need to get before being eligible for any new policy.
You may even find that replacing a roof or insurance issue on the home can save you money in the long run. The reduction in premiums paid compared to the cost of something like a roof, may even offset itself with the savings. The harsh reality is insurance policies are only going to get harder and harder to get with these trying conditions for insurance carriers. With around 1.5 billion in losses from insurance companies over the last year, it is only logical that the premiums will have to continue to go up to offset these costs. Most companies anticipate an increase of 5-10% over the next year, so the best thing you can do is have your house in top shape and address all the items that the insurance company finds problematic ahead of time. By doing that and shopping the rates of multiple local independent agencies, hopefully you can avoid the inevitable rate race of people trying to obtain policies last minute.