The Cuban community residing in Florida, along with other property owners in the state, is facing a challenging landscape regarding home insurance. The state-run Citizens Property Insurance Corp. has warned that it plans to push for an increase in the value of its policies, which could impact more than a million homeowners. Property owners in Florida need to stay vigilant and adjust their expenses to cope with what lies ahead.
Citizens, created by the government as an insurer of last resort, holds a significant client base with over one million policies that could see their costs rise in 2025. Homeowners turn to the company to avoid the high rates of the private market. This situation is causing insurers to disappear in certain areas of Florida. While it might seem to strengthen Citizens, the company fears it could struggle if natural disasters occur and it cannot pay so many claims.
This major state insurer has requested a general rate increase from the Florida Office of Insurance Regulation (OIR). Homeowner multi-peril policies could see a 13.5% increase. Condo owners would face an average 14% hike in their home insurance premiums. According to CEO Tim Cerio, these increases are necessary because Citizens currently charges less than private insurers, distorting the market and hindering the sector’s recovery.
If the Office of Insurance Regulation approves the proposal, the new rates would take effect when policies are renewed starting January 1, 2025. The homeowner multi-peril policy is the most common in Florida because it covers structures and personal belongings. In Miami-Dade, with an average household income of $65,000, the average premium would rise from $5,113 to $5,804 annually, according to Diario Las Américas.
In 2025, homeowners with properties valued at over $600,000 will be required to have flood insurance, implemented gradually to protect their properties, as flooding is one of the most impactful natural disasters on homes.
The increase in policy value will affect homeowners in Florida, who are already dealing with high living costs and are burdened by expenses set by homeowners’ associations to comply with legal regulations for higher maintenance reserves following the Surfside tragedy. Real estate sector controls are tightening. In June, Governor Ron DeSantis signed HB 1049 into law, promising to improve transparency in property transactions in the state. The regulation aims to protect buyers from potential scams related to properties affected by natural disasters, especially floods.
DeSantis believes that even if Citizens is granted the 14% increase (the annual maximum allowed), the company's rates would still be more affordable than those of other private insurers. The growth of Citizens leads to the reduction of private insurers in the state. It should be noted that in June 2020, the state-run company had 474,630 policies and has tripled that number in three years. The lack of competition in some areas of the state, like the Florida Keys, exacerbates the situation.
The consolidation of Citizens Property Insurance Corp. as the primary insurer in the state and the potential rate hikes are critical issues that require attention. Homeowners need to stay informed and prepared to face these changes in the insurance market.
Understanding the Impact of Florida's Home Insurance Rate Increase
As Florida homeowners brace for potential insurance rate hikes, it's essential to understand the ramifications and prepare accordingly. Here are some key questions and answers to help navigate this challenging situation.
Why is Citizens Property Insurance Corp. increasing its rates?
Citizens Property Insurance Corp. is increasing its rates because it currently charges less than private insurers, which distorts the market and hinders the sector's recovery. The rate hike aims to bring Citizens' premiums in line with the private market.
How much will homeowner insurance rates increase?
Homeowner multi-peril policies could see a 13.5% increase, while condo owner policies might experience an average 14% hike if the rate increase is approved by the Florida Office of Insurance Regulation.
When will the new rates take effect?
The new rates will take effect when policies are renewed starting January 1, 2025, if the rate increase proposal is approved.
Will flood insurance be mandatory for high-value homes?
Yes, starting in 2025, homeowners with properties valued at over $600,000 will be required to have flood insurance, implemented gradually to protect against flooding, a significant natural disaster in Florida.