Florida Property Owners Face Potential 13.5% Rate Hike in Insurance Costs
Property owners in Florida could soon see their insurance premiums rise, as Citizens Property Insurance has requested a 13.5 percent rate increase. This potential hike would impact homeowners in what is already the most expensive home insurance market in the country.
Why the Increase?
Citizens Property Insurance, a state-backed insurer, faces significant financial risks due to the gap between its rates and those of the private insurance market. While a nearly 93-percent increase would be needed to match private sector rates, state regulations cap annual rate hikes, limiting the increase to 13.5 percent. According to Tim Cerio, president and CEO of Citizens, the current rates are “actuarially unsound,” meaning they do not accurately reflect the true cost of insuring properties in Florida. “The market’s rates are up here, and we are down here. It’s basically a form of subsidized insurance,” Cerio said.
Impact on Homeowners
If approved, the rate hike would particularly affect multi-peril policies, with the average annual premium rising from $3,560 to $4,041. Florida homeowners already face the highest insurance costs in the nation, with last year’s average rate nearing $11,000, according to Insurify. The state has also experienced some of the steepest premium increases in the U.S. over the past year.
Broader Market Implications
The rising cost of property insurance is not just a burden for individual homeowners; it is impacting all sectors of the real estate market in South Florida. The combination of increasing insurance premiums, inflation, high interest rates, and other cost pressures is affecting both commercial and residential real estate, adding to the financial challenges faced by property owners and investors alike.
What’s Next?
The decision on the proposed rate hike is expected by August 26. If approved, Florida property owners will need to brace for yet another increase in their already hefty insurance premiums, further complicating the cost of homeownership in the state.
