Florida’s property insurance market is experiencing a perfect storm
A combination of insurance hikes and ever-stronger storms are making Florida a rather pricey paradise.
Category 5 Hurricane Beryl wreaked havoc in the Caribbean last month; overperforming for a storm so early in the season. While this storm spared Florida, the state is likely to be in the crosshairs of several, possibly even stronger, storms in the coming months.
At the risk of sounding particularly alarmist, we aren’t ready—or anywhere close to it. The 2023 season included the strongest hurricane to hit Florida’s Big Bend region in over a century, leaving behind more than $3 billion worth of damage in its wake. And here’s more bad news: Some experts predict the hurricane season now upon us will be particularly hellish—and very expensive for the insurance market. Homeowner insurance policies in the Sunshine State are already among the priciest in the nation due to hurricanes, with policyholders set to potentially pay average annual premiums of $11,759 by the end of 2024.
These twin terrors of insurance hikes and ever-stronger storms are making Florida a rather pricey paradise. And we haven’t even gotten to the cheap materials that far too many contractors are using to build new homes. Florida builders are continuing to construct new homes from wood, all but begging the next named storm to cause massive problems.
Sadly, thanks to a glut of cheap lumber of late, the number of wooden homes being built in Florida has been increasing. To repeat what should be more than obvious, especially in the building trades: Cheaper doesn’t necessarily mean better. Actually, it means quite the opposite when it comes to hurricane preparedness and long-term defective construction. Thanks to all of that cheap lumber flooding the construction market, homes are going up faster and faster. Construction defects in such cheap wooden homes are all but guaranteed as contractors seek to make a quick buck and anxious homeowners are eager to move in. However, it is these vulnerabilities that the next hurricane will exploit.
This paradigm is unsustainable, dangerous, and, in the end, economically disastrous for Florida’s insurance sector. Insurers have left the state in droves, thanks at least partly to this devastating cycle. It’s why so many insurers often pay out the bare minimum—if they pay out at all. Tallahassee seems woefully uninterested in this quagmire, even as more homeowners aren’t bothering to purchase homeowners’ insurance, as the Orlando Sentinel reported.
Some believe that the market will ultimately correct itself as new insurers come into the state with prices more palatable for the average homeowner. Others believe the government must step in while some see a partnership between government and insurance companies as the solution. However, in the face of what could be a catastrophic storm season, coupled with new homes that were constructed with the cheapest materials available and accelerated schedules, the risks continue to climb.
We must take action to protect our properties, ensure that it is constructed with strong materials, and stop the insurance market from continuing to spin out of control. Builders need to be held accountable for the homes they deliver as storms expose the defects they have left post-construction. Together we can stanch the flood of insurers heading away from Florida permanently, ensure that our state remains a magnet for doing business, and that residents can utilize valid insurance claims to stave off risks; this is ultimately why they are paying for insurance. In this way, we can keep the “sunshine” in the Sunshine State—even when it rains.
Kelly M. Corcoran is a partner in Ball Janik’s Orlando office, where he focuses on resolving complex insurance coverage and construction defect disputes. He may be reached at kcorcoran@balljanik.com.
Opinions are the author’s own.