Pensacola News Journal
Florida homeowners insurance prices are skyrocketing. Is self-insuring the answer?
Brandon Girod, Pensacola News Journal – July 18, 2023
Florida home insurance prices have skyrocketed over the years, outpacing the national average by nearly four times as homeowners still in the private market pay about $6,000 per year, which is quite a bit higher than the national average of $1,700.
Some homeowners have been able to find some reprieve through state-backed Citizens Property Insurance Corp., which was originally meant to serve as an insurer of last resort for homeowners unable to find insurance coverage in the private market. But it, too, is seeking to raise its rates by about 13.% to “depopulate” and shed some of the policies it has gained over the past three years.
Rising prices have led many Florida homeowners to question if purchasing home insurance is required and whether it’s cheaper to forego it completely — assuming their lender doesn’t require it.
SmartFinancial, a technology company that partners with some of the country’s top insurance companies to compare prices, recently laid out how much those out-of-pocket costs would run for the average homeowner.
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Do I need a home insurance policy in Florida?
There is technically no requirement that homeowners must carry property insurance that covers fire, flood, theft or storms. The caveat is that most mortgage lenders will require homeowners to carry home insurance, windstorm coverage and even flood insurance if the property is located in a designated flood zone.
Those who purchased their home outright or have paid their mortgage off may choose to “self-insure,” which is an informal way to describe the act of foregoing home insurance and opting to pay for potential repairs completely out of pocket.
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How much does self-insurance cost?
Out-of-pocket expenses for home repairs will always vary based on where you live, supply and demand, the nature of the repairs and the quality of materials needed to make the repairs. In a press release, SmartFinancial provided a rough estimate of how much those costs would be for the average homeowner.
- Roof replacement cost: $5,000-$10,000
- Roof repair cost: $40-$1,800
- Sinking or settling foundation: $4,000-$10,000
- Water damage: $1,000-$5,000
- Mold removal: $1,000-$4,000
- HVAC replacement: $7,000-$10,000
- Electrical rewiring: $4,000-$12,000
- Termite damage: $3,000
- Repair or replace a water heater: $600-$1,700
- New pipes: $600–$1,600 per fixture; $5,000 for a new sewer line
- Septic system repair: $1,750-$6,000
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Homeowners insurance claim statistics
In addition to those costs, SmartFinancial also included information about how likely it is for homeowners to file claims involving wind and hail, fire and lightning, water damage and more.
- Wind and hail account for 45.5% of claims. This amounts to about 1 in 35 homes.
- The average cost to insurers for claims related to wind and hail was $11,695.
- Fire and lightning account for 23.8% of home insurance claims.
- The average cost to insurers was $77,340 per claim
- Water Damage and Freezing account for 19.9% of home insurance claims
- The average cost to insurers was $11,650 per claim
- Bodily injury and property damage claims for injuries or damage to others.
- The average cost to insurers was $30,324 per claim
- 1 in 525 homes file a theft-related claim each year. These incidents account for 0.6% of home claims.
- The average cost to insurers was $4,415 per claim
How many Florida homeowners go without insurance?
More than in most places. According to the Miami Herald, the Insurance Information Institute estimated that 13% of all Florida homeowners are going without property insurance, almost double the national average of 7%.