Home insurance rates contribute to growing living costs

Florida property insurance is the most expensive in the nation, and experts say a continued increase could add another barrier to homeownership.

In the past year, home insurance rates shot up due to an increase in roof-related claims and lawsuits. According to the National Association of Insurance Commissioners, Florida holds 76% of the country’s homeowners insurance litigation despite holding 8% of homeowner claims.

Joe Farrell, vice president of public affairs for the Pinellas Realtor Organization, told the Catalyst that down payments are the largest barrier to homeownership in Pinellas County, but if the insurance rates become more expensive it could “make it that much harder” to own here.

According to former Florida Deputy Insurance Commissioner Lisa Miller, a high number of roofing claims filed since Hurricanes Irma and Michael struck in 2017 and 2018 are partially to blame.

When insurers deny claims, policyholders are able to sue using lawyers who can, under statute 627.428, earn their commission from the insurance companies themselves, if the suit is won. The result, according to Miller, is predatory advertising and over-litigation.

Ads claiming homeowners’ eligibility for “free roofs” have grown common as more lawyers are willing to challenge insurance claim denials in court. But Miller claims many of these suits are for minor roof damage. Her bottom line: “property insurance policy is not designed to pay wear and tear.”

To compensate for increasing claims and legal fees, insurers have had to raise their prices or drop policyholders.

As more insurance policies jump as high as double-digit percentage points, many are defaulting to Citizens Property Insurance Corporation, the budget, state-backed provider intended to be the insurer of “last resort.” The company now holds over one half million of Florida’s home insurance policies, while many private providers continue seeing dozens of new lawsuits a day.

Todd Llewellyn, owner and agent at St. Pete-based Llewellyn Insurance Services, called the current state of his market “a perfect storm of calamities,” in a phone call with the Catalyst. The local insurer has been following the Florida House and Senate as they address these issues in the current legislative session.

Tallahassee passed SB 76 in early April, which limits the amount insurers have to pay for lawyers and roofing claims, and reduces the amount of time policyholders can file hurricane-related claims from three to two years since the storm occurred.

Llewellyn said he knows something needs to cure the market, but also expressed concern for homeowners who need repairs. A clause in SB 76 says if your roof is over a decade old, insurers only need to pay for the cost of that roof instead of paying for a new one. According to the local insurer, it’s hard to find a roof in St. Petersburg that’s well under that.

Lisa Miller also reflected on the bill, saying it’s “just a start.”

This week, the Florida House of Representatives will hear HB 305, a related bill that would add more regulation to the insurance market, including a cap on annual percentage increases.

Despite some concern for the future cost of living, Farrell said the Tampa Bay real estate boom is not showing signs of slowing despite extreme costs and imbalance in the home insurance market.