A new study reveals that Florida has the highest average annual homeowner insurance premium in the United States.
The research by personal injury law firm H&P Law analyzed data on annual homeowner insurance premiums across all 50 states between 2017 and 2021 from the Insurance Information Institute. The average homeowner insurance premium measured represents the total annual cost in dollars for standard coverage.
According to H&P Law, Florida leads the nation with an average annual homeowner insurance premium of $2,100, which is 73% higher than the national average of $1,213.
“The study reveals Florida as the highest annual homeowner insurance premium-paying state in the U.S.,” said a spokesperson at H&P Law. “This elevated premium is often influenced by risk factors including severe weather events, natural disasters, property values, and state insurance regulations. When insurance costs rise, homeowners face increased financial burdens on top of their mortgage payments.”
St. Cloud agency principal Cheryl Durham of Ashton Insurance Agency said there are many factors that play into the high homeowner insurance costs.
Durham said these other factors are fraudulent claims, construction and land costs, replacement costs, and the cost of living.
“There are a lot of fraudulent claims,” Durham said. “During Hurricane Charley (2004), one of the carriers was sent a video of a guy on his roof with a shovel lifting up his own shingles because he wanted a new roof. People have become very dishonest.”
Durham said another thing people need to consider is the cost of construction.
“It’s gone up over 100% on construction, So now, instead of insuring a $190,000 house, you’re insuring a $350,000 house that attributes to the amount of the claim,” she said. “So that has something to do with it also. And people don’t take into account that the claims are larger because of the cost of living.”
Replacement cost also takes into account switching materials of the house for something more affordable.
“The insurance companies have to insure that each home for the replacement cost, not the value, so they have to be able to put the house back the way it was,” Durham said. “Inflation is to blame. Prices have doubled, replacement costs have doubled, so insurance has doubled. It has doubled here from what it was 12 years ago.”
Durham said there are three more things that impact the cost of insurance.
“So, you’ve got your attorneys and public adjusters, the high numbers of claims coming from hurricanes, and you’ve got the cost to rebuild,” Durham said. “The minute you hire an attorney and public adjusters, the insurance companies go, ‘Whoa, wait a second,’ and they start looking closer at the claim.
“I sat and watched a small leak in a bathroom shower go from a $2,000 claim to a $25,000 claim because the public just got involved. It should have only been $2,000. I saw the damage, I saw the photographs, but all of a sudden, ‘We needed new floors throughout the entire house and new carpets in the bedrooms. Now it doesn’t match my colors, so I need base cabinets.’ It was horrible what these people did to the insurance company.”
There are ways for homeowners to help reduce insurance costs, like bundling policies, improving home security, raising deductibles, and shopping around for competitive rates.
“Meanwhile, state authorities could explore insurance market reforms, incentivize disaster mitigation measures, and enhance consumer protection to help decrease premium costs across these states,” said the spokesperson at H&P Law.
Durham said that her company has helped their customers by advising them to lower their contents costs, raise the deductibles, and remove other structures on their property.
“They have to think hard,” Durham said. “’Do I want to raise my deductibles? Do I want to lower my content? Do I want to remove other structures so they can remove sheds and fencing?’ A lot of people have to be careful. They can also have their replacement costs reevaluated and possibly lower the amount of insurance they’re carrying, but in most cases, it rises due to the cost of construction.
Durham said the cost of the contents, the other structures, and the deductibles are really the only way to bring the insurance down. The state has eliminated the Assignment of Benefits, “Which was huge,” Durham said. That’s an agreement that transfers the insurance claims rights or benefits of the policy to a third party, like a construction contractor, giving them authority to file a claim, make repair decisions, and collect insurance payments without the involvement of the homeowner.
“No longer can roofers say, ‘Well, sign here and we’ll take care of everything,’ and then claim $25,000 for a $16,000 roof,” Durham said. “And that’s a lot of fraud that was going on.”
