Last August, Bruce Gimbel learned his home insurance premium was about to triple to more than $4,700 a year. He wasn’t alone: Thousands of Florida residents are facing sudden and dramatic increases to their insurance premiums, while many more have been asked to replace their roofs or risk losing coverage altogether. 
Florida’s home insurance companies are also struggling, with some refusing to take new customers and others closing up shop entirely.
“There’s no relief in sight for insurers and there’s no relief in sight for homeowners,” says Mark Friedlander, a Florida resident and spokesman for the Insurance Information Institute. He says the home insurance market in Florida is “on the brink of collapse.”
How did things get so bad?
Why are home insurance premiums so high in Florida?
Florida is the most hurricane-prone state in America, which often results in damage to homes and roofs. Since 1851, 120 hurricanes have hit the state — almost twice as many as Texas, the second-most hurricane-prone state.
While the threat of natural disasters can make insurance more expensive, it’s the lawsuits resulting from roof repair schemes that have brought Florida home insurers to their knees. Friedlander described how these schemes work: After a storm, some contractors go door-to-door in affected neighborhoods offering “free” roof inspections and repairs, saying they’ll bill the homeowner’s insurance company.
“In most cases, these roofing claims are fraudulent because there’s no roof damage, or if there is damage, it’s wear and tear and it’s very minimal,” Friedlander says. (Here is how homeowners insurance typically covers roof damage.)
These roofers also bill home insurance companies at inflated rates, and if they don’t get paid, they sue, Friedlander says. In 2021, more than 116,000 lawsuits were filed against Florida insurance companies. No other state had more than 900. In fact, over 75% of all the property claim lawsuits in the country were filed in Florida over the past two years, according to Insurance Information Institute data shared by Friedlander.
This has made it difficult to be a home insurance company in Florida. Of the 52 insurers that fall under the purview of the state insurance regulator, only three have generated a positive net income over the past four years, Friedlander says.
But what difference does it make if you’re one of the homeowners who may have gotten a “free” roof out of this scheme? Florida homeowners now pay the highest average home insurance premiums in the country, at $3,600 a year, compared to $1,398 for the rest of the country, according to Friedlander. Premiums there have increased by 25% in each of the past two years, and are expected to rise another 30% in 2022. Plus, some home insurance companies in Florida are refusing to renew policies unless the homeowners replace their roofs — even if they haven’t been damaged.
How to survive the Florida home insurance market
Although the frequency of these lawsuits threatens the viability of the Florida home insurance market, Friedlander says Florida case law makes it difficult to fight them. A bill that would have added regulations to the property insurance industry, including limits on roof claim payments, failed to make it out of the state legislature before the session ended in March.
Gimbel, the Spring Hill resident whose insurance company planned to raise his premium by almost 200%, says he started searching for a new insurer as soon as he got the higher quote. (Disclosure: Gimbel is the father of Jennifer Gimbel, a home insurance managing editor for Policygenius.) Some companies he contacted wouldn’t even give him a quote because his roof, which he had replaced in 2001, was too old.
Thankfully, Gimbel managed to find a policy from State Farm for $1,800 a year, on the condition that he get a four-point inspection examining the roof, plumbing, HVAC system, and electrical work. State Farm offered to cover him if he made repairs to his bathroom.
But replacing the roof presented its own headache. Since many insurers are requiring homeowners to replace their roofs, and supply chain issues continue to afflict the housing industry, it took a while to find a contractor, Gimbel says. 
“If you’re going to do any roofing work or remodeling, you need to plan a six-month window before they can even do the work in some cases,” he says.
Gimbel found a contractor who could replace the roof for $18,000. A hefty expense, but Gimbel says he expects it to pay off over time in the form of home insurance savings.
This kind of story is typical in Florida, Friedlander says. “It’s the most volatile private insurance market in the U.S. That’s not debatable.”
The playbook for saving on home insurance may not work in Florida like it does in other states. Friedlander recommends shopping around, just as you would in other insurance markets, though you may need to consider creative options. Some homeowners may have to turn to surplus carriers. Unlike domestic insurance carriers, which are regulated by the state, surplus carriers can charge higher prices. In most states, these are typically an option when homes present a particularly high risk.
“Surplus lines policies can provide the same kind of coverage and policy types as standard insurance carriers,” says Aaron Keeth, a licensed home insurance expert at Policygenius. “The only difference is how they relate to the state’s insurance regulations and laws.”
For example, a state regulator will often step in to pay outstanding claims if a company it regulates goes under — that won’t be the case if a surplus carrier goes under, Keeth says.
If you go this route, Friedlander recommends working with an insurance agent. An agent can help ensure you work with a reputable, highly rated insurance company. He warned against reducing your coverage to save money, especially in a high-risk state like Florida, and because the cost of materials and labor has gone up so much due to inflation.
“If you had to repair or replace your home, those all cost more than they did a year ago,” Friedlander says.
Jeffrey McDermott, a certified financial planner and founder of Create Wealth Financial Planning in Florida, says homeowners, and prospective homeowners, should factor in additional costs like insurance, taxes, and repairs into their home budgets — and assume these costs will go up over time.
“This is why having an emergency cash reserve is so important,” McDermott says. “You might typically think of a roof replacement as something you can plan ahead for, but this is a case where a long-term need suddenly becomes an emergency.”
Image: Ben Hickey