POLK COUNTY, Fla. — Florida homeowners already pay four times the national average in premiums to insure their homes, and now an international study finds the cost to replace property in the U.S. is up 30% in the last five years.
“Oh, instead of paying $2,500, now you're gonna pay $5,000,” exclaimed Polk County Homeowner Mike Johnson. “When you send me a bill that’s 87% higher... In what country?!”
When Johnson bought his home in Eagle Rock in 2014, he said his insurance was just below a thousand dollars with Olympus Insurance.
Then in 2021, it went from $1,200 to $3,000.
“They came back and said well, if you pay if you have your roof redone, we'll take it back to the $1500,” he said.
Johnson wrote to Governor Ron DeSantis and the Department of Financial Services (DFS).
DFS responded by stating that the Office Of Insurance Regulation had approved a 55.9% rate increase for Olympus, adding:
“However, there are additional factors which impact premiums not limited to but including claim history, age of roof, operating costs, costs for reinsurance, and projected losses. The additional increase to your renewal was due to other factors which the company did not specifically list."
Johnson switched to Castle Key, the Florida subsidiary of Allstate. They insured his home, as is, for $1,800 dollars. It jumped to $2,500 in 2022, and his most recent renewal came in at $4,715.
“It was an 87% rate increase!” exclaimed Johnson.
In his policy, the company claims the cost to replace his home has gone up $7,000 dollars in the last year, now at $637,000.
It stated: “The total premium includes a $2,131.00 increase due to rate change.”
“They say it's going to cost $637,000 to redo the house. That's incorrect. You can rebuild that house for probably $300, 350,” Johnson said.
We reached out to Allstate to ask about Johnson’s rate increase. A spokesperson said in a statement:
“The cost of providing reliable protection for Florida homeowners has risen dramatically from factors like inflation and extreme weather, and we’re taking actions to ensure we can protect customers over the long haul.”
In recent years, Florida insurers have claimed financial distress from excessive lawsuits--many from roofing scams, but now, agent and president of Southshore Insurance, Michelle Mosher, explained inflation is also hitting homeowners.
“When we run a replacement estimator, part of that is how much does it cost the insurance company to go back and rebuild, not necessarily what you're purchasing it for, but the construction costs,” Mosher said. “We're seeing construction costs rise that makes the policy coverage rise, which in turn makes the premium rise.”
A new study by the International Insurance Society found the U.S. leads the world with a 30% increase in the cost of replacing property in the last five years.
The Insurance Information Institute’s data showed the cost of replacing a property skyrocketed in 2021.
Mosher said homeowners could consider cutting coverage in other areas if they have to.
“What about your personal property? Or what about your loss of use? Or what about your deductibles? There are things there that we can tweak,” Mosher explained. “There are things you could decide to self-insure like your screen enclosure, you know, you're paying a couple hundred bucks for a hurricane endorsement for your screen enclosure. Maybe you'd rather self-insure that and get more coverage on the actual structure.”
Overall, she advised homeowners to speak up and contact their local state representatives.
“Tell them to stop screwing people!” Johnson said. “They have to have a resolve so that the people that are going to live in Florida can afford to live here.”
According to theInsurance Information Institute, if insurers don't raise rates to cover the cost of inflation and recent weather impacts, the consequences could lead to insolvency.
Companies are pulling from their policyholder surplus, but if their losses and expenses exceed their revenues by too much for too long, the Institute said more insurers risk insolvency.