Why are Homeowners Insurance Premiums so High in Florida?

Legislation specific to Florida property insurance, the state’s susceptibility to hurricanes, and a rising rate of insurance fraud have all contributed to the state currently costing homeowners almost twice as much for insurance as in other states.

Insurance Rate Factors from 2005-2010

In 2011, a study based on the Insurance Information Institute’s report including an Overview of the Florida Property Insurance Market was done of the Florida homeowners insurance industry, which revealed that:

• Since 2005, property losses had increased by 80%
• Non-catastrophic claims costs had risen 17% per year since 2005
• The fact that between 2005 and 2010 there had been no hurricane landfall only prompted more worry about the costs of the next big storm in damages
• Between 2005 and 2010, the time frame in which to report and claim hurricane damage was increased from 1 to 5 years, allowing retroactive claims for Wilma

All of these factors led to significant increases in homeowners insurance rates, and the trend continued when a new problem started to appear with alarming frequency.

Assignment of Benefits Fraud

When a home is damaged, an insurance claim must be made to the carrier which can then assess the damage and provide the appropriate compensation based on the coverage held by the homeowner. However, unscrupulous contractors often make a practice of targeting homeowners after a storm or other event, promising to save the homeowner money by helping them avoid paying their deductible. All the homeowner has to do is sign an Assignment of Benefits, or AOB, form.

Many homeowners don’t realize that by signing the form, they sign away their rights – allowing the contractor to inflate costs and then use an attorney to sue the insurance company if the carrier objects to the fabricated costs. .A recent report titled “Restoring Balance in Insurance Litigation,” referencing AOB fraud shows that between 2010 and 2011 litigation against insurance companies spike a staggering 66%, and the increases have continued; Florida’s population increased only 26% between 2010 and 2016, but lawsuits against insurance companies has risen 280%.

How can the average homeowner help fight back against AOB fraud? Always call your insurance company first to report a claim, and never sign an AOB form unless your insurance company advises you to do so. Stopping AOB fraud is the best way to help prevent insurance rates in Florida from continuing to rise.

About Olympus Insurance Company

Headquartered in Palm Beach Gardens, FL and founded in 2007, Olympus Insurance Company specializes in Florida property insurance. Through its independent agency force, Olympus insures $40 billion worth of residential and investment property including homes, condos, rental property, and valuable personal property, with umbrella coverage and Spartan Enhanced Coverage available. Coverage for individual risks up to $5 million in total insured value is provided on one of the most comprehensive coverage forms in the industry.

For more information, visit olympusinsurance.com.

This article is for informational purposes only and does not form a part of, replace, change or amend any terms, conditions, provisions or language within your Olympus Insurance policy. We encourage you to read your entire policy.