To put it simply, Florida insurance rates are going up for various reasons, depending on the type of insurance. Here are some of the main factors that affect the cost of insurance in Florida:
One of the main drivers of rate increases is the high frequency and severity of natural disasters, such as hurricanes, floods, and wildfires, that damage properties and trigger claims. Florida is the most hurricane-prone state in the U.S., and has experienced several major storms in recent years that have caused billions of dollars in losses for insurers and homeowners. Another factor is the rising cost of reinsurance, which is the insurance that insurers buy to protect themselves from large losses. Reinsurance rates have increased significantly due to the increased risk of catastrophes and the reduced supply of capital in the global market. The third and most costly factor is the high level of litigation and fraud that inflates claim costs and legal fees for insurers. Florida has a high percentage of claims that involve attorneys or public adjusters, who often file lawsuits against insurers on behalf of policyholders. Some of these lawsuits are based on inflated or fraudulent claims, such as roof damage or water leaks that are not covered by the policy or are caused by wear and tear rather than a covered peril. According to WUSF Public Media¹, property insurance rates in Florida are predicted to jump at least 40% in 2023, according to the Insurance Information Institute.
One of the main drivers of rate increases is the high frequency and severity of accidents, injuries, and lawsuits that result from driving in Florida. Florida has one of the highest rates of uninsured drivers in the country, which means that insured drivers have to pay more to cover their own damages and medical expenses if they are involved in a collision with an uninsured driver. Florida also has a high rate of distracted driving, impaired driving, and speeding, which increases the risk of crashes and injuries. Another factor is the high cost of medical care and auto repairs, which greatly impacts the amount that insurers must pay for claims. Lastly, the mandatory personal injury protection (PIP) coverage that Florida requires for all drivers, which covers up to $10,000 of medical expenses and lost wages for anyone injured in an accident, (regardless of who is at fault) this coverage is often abused by fraudulent or excessive claims that drive up premiums for everyone. According to ValuePenguin⁴, auto insurance rates in Florida have increased by an average of 23% overall since 2015 — faster than the national increase of 17% in the same period.
Other types of insurance
Such as health insurance or life insurance, the main drivers of rate increases are similar to those in other states, such as inflation, demographic changes, regulatory changes, and market competition. However, some factors that are specific to Florida may also affect the cost of these types of insurance, such as the high percentage of elderly population, who tend to have higher health care needs and lower life expectancy; the high exposure to environmental hazards, such as heat waves, air pollution, and infectious diseases; and the high cost of living and doing business in some areas of the state.
To find out more about how to lower your insurance costs in Florida, you can shop around for different providers and policies, compare quotes and discounts online or with an agent, review your coverage options and deductibles regularly, improve your credit score and driving record, maintain your home and vehicle properly, and take advantage of any available programs or resources that can help you save money or reduce your risk.
(1) Florida homeowners will face a projected 40 percent increase in property insurance rates | WUSF Public Media. https://wusfnews.wusf.usf.edu/local-state/2023-04-04/florida-homeowners-to-face-a-projected-40-percent-increase-in-property-insurance-rates.
(2) Auto Insurance Rates Increases in Florida (2022) - ValuePenguin. https://www.valuepenguin.com/auto-insurance-rates-increases-florida.
(3) Florida Regulators Now Reviewing Rate Hikes of 14%, 62% and 103%. https://www.insurancejournal.com/news/southeast/2023/03/31/714518.htm.
(4) Florida property reinsurance rates expected to jump 40% to 50% in June .... https://www.wfla.com/news/florida/florida-property-insurance-rates-expected-to-jump-40-to-50-in-june/.
(5) Add auto insurance to the increasing costs of living in Florida. https://floridaphoenix.com/2022/11/23/add-auto-insurance-to-the-increasing-costs-of-living-in-florida/.
(6) Why Are Homeowners Insurance Premiums Increasing in Florida? https://www.businessinsider.com/personal-finance/homeowners-insurance-increase-florida-2022-5