Home Insurance Has Fallen And Can’t Get Back Up

By: Butch Swank

I’d like to take a departure from my recent articles that have mostly not been business related. There are some important changes coming up for the home insurance marketplace that I want to share. After the November elections our governor, Ron Desantis, has informed the Florida state legislature that he is setting up a special session this December. The legislature normally would not meet until their scheduled session that runs from March 7th to May 5th. The point of this urgent special session is to address our collapsing home insurance industry.

As almost everyone knows, home insurance rates have skyrocketed, and I am telling you that rates will continue to go up. We help clients daily with new home policies and see where things are going. We have also had six home insurance carriers go out of business so far this year – fewer carriers also means less competition. It is perfectly reasonable to question why they are going out of business if rates are so much higher. The answer is simple: lawsuits. Florida accounts for only 8% of insurance claims filed in all of the United States. Even with our hurricanes, fires, floods, etc – we only account for 8%. However, we account for 80% of the lawsuits in the United States. Our legislators have created an environment that 100% legally allows attorneys to sue home insurance companies at will. They have also, in my very biased opinion, kept it this way for far too long. When a lawsuit is filed against you there is no alternative other than to defend yourself. Attorneys are expensive. You know what else is expensive? Roofs. So, in our current system, the attorneys and roofers have joined forces and they file lawsuits against home insurers for roofs that were old (sometimes even pretty new ones) or ones that have simply worn out from our good old Florida sun.

Imagine this scenario: Someone knocks on your door. In my example, let’s assume you own a Ford F-150 that is 8 years old. The person that knocks on your door says, “Hey, I noticed you have a dent on your rear bumper and the paint is scratched on your door. Plus, your tires look pretty worn. If you sign here, I can file a claim (lawsuit) against your auto insurer and get you a brand-new truck lickety-split.” Sounds kind of nuts and more than a bit irresponsible, right? We all know trucks and cars wear out and we expect that. Also, it is our responsibility to maintain our vehicles. Clearly, roofs wear out, too, but under our current laws, this insane truck scenario applies to roofs and is totally legal. Can you imagine what would happen to auto insurance rates if my example were allowed to happen? Well, that is exactly what is happening to home insurance. Insurance carriers do all kinds of complicated math to calculate risks to homes from normal things like hurricanes, floods, or some crazy Florida man story that involves beer, fireworks, and a few gas cans in the garage. They use these calculations to figure out what the year’s expected claims costs will be and then file home insurance rates with the State. They do this in the hopes of eking out a profit so they can actually stay in business for the next year. Their calculations nowadays simply cannot keep up with the lawsuits even though they have repeatedly asked the State for price increases. Rates go up but the cost of the lawsuits is always higher. No business can survive in this scenario.

So, our legislature will meet in December with the intention of fixing this. We’re very lucky to live in the great state of Florida. It is so beautiful, has so many amazing people, and barring the random and terrifying hurricane, our weather is amazing. The sad part is that if this does not get fixed, our home insurance and then the home real estate markets will collapse. In my agency, we have had numerous clients have to sell their houses and move out of state because they can’t afford their insurance premiums. I am telling you that it’s a miserable feeling when a widow on a fixed income tells you that’s why she has to move – and it’s happening more and more often. I am, quite frankly, beyond angry that this has been allowed to get this bad. I urge everyone reading this to speak with their legislators right after the election and demand things get fixed. No other states allow this insanity to occur, and our elected officials need to stop the talk and take action. If you’ve read my previous articles, you know that I am at heart an optimist. That’s why when you hear this you know I mean it: Please call or email your legislators and demand this gets fixed, or we’re in for a bleak future.

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