Moving to Florida? Budget More for Home Insurance Than Expected
While Florida has been one of the top states that people have moved to in recent years, prospective residents should know that the warm weather comes at a cost. Home insurance rates in Florida have recently soared, making it the most expensive state to cover a house. Before you start looking for a new home and calling moving companies, learn how severe weather events are causing insurance premiums to rise in the Sunshine State.
Our Experts
We consulted the following six experts for insights on this article. They shared their expertise on climate change, finance, and other issues to shed light on Florida home insurance rates.
- Molly Nation, associate professor of environmental education at Florida Gulf Coast University
- Ken Johnson, associate dean of graduate programs at the Florida Atlantic University College of Business’ Finance Department
- Parinitha Sastry, assistant professor of business in the finance division at the Columbia University Business School
- Ben McCartney, assistant professor of commerce and research affiliate at the White Ruffin Byron Center for Real Estate at the University of Virginia
- Dave Jones, director of the Climate Risk Initiative at the University of California, Berkeley Center for Law, Energy, and the Environment
- Lori Medders, chair of the Department of Finance, Banking, and Insurance at Appalachian State University
Why Are Florida Home Insurance Rates Rising?
Home insurance rates in Florida increased by an average of 68% between 2021 and 2023. Although Johnson says that damage from hurricanes is a primary reason for the state’s high rates, he thinks several factors are at play. “Insurance fraud, severe weather events, and a very litigious environment in the state contribute significantly to the higher potential for losses among insurance providers,” Johnson says.
Inflation
High inflation in recent years has increased costs for nearly everything, and insurance premiums are no exception. Large losses in states such as Florida have led insurance companies to struggle when paying out claims for rebuilding and repairing homes.
Medders explains that those rebuilding costs were also affected by inflation. “The cost of construction materials and labor rose during 2021–2023 at rates surpassing the overall inflation rates, making payment of claims more expensive than expected,” Medder says.
Although the rate of inflation has decreased in recent months, Florida homeowners will still likely see insurance premium increases this year. Prices may rise at a slower rate in the future, but insurance costs are predicted to jump as high as 50% or more for some Floridians this year.
Lack of Options
Another factor behind Florida’s rate increases is a lack of competition, as many insurers have stopped writing new policies. Frequent and devastating hurricanes have made Florida a costly state to insure, leading dozens of companies to leave the state in recent years. In the 1980s, Florida saw an average of one disaster per year exceeding $1 billion in losses; in the past five years, Florida has seen an average of almost five disasters per year exceeding $1 billion in losses.
For insurance, customers are flocking to Citizens, Florida’s government-backed insurance company meant to be a last resort for customers unable to find coverage elsewhere. Over the past five years, Citizens has written a record number of new policies, rising from roughly 442,000 policies at the end of 2019 to 1.2 million today.
Some experts think Citizens lacks the funds to pay out claims in the event of a difficult season. Medders says that state-established entities like Citizens “have limited claims-paying capacity. A ‘big one’ or successive series of significant loss events is questionably absorbable by the state’s economy and insurance system.” Citizens announced that policyholders may have to pay a 15% surcharge on top of their premiums in the event of a deficit to cover potential issues.
Extreme Weather Events
Since the government began documenting hurricanes in 1851, Florida has seen the most hurricanes of any state: 125 storms, with 40 of those being major hurricanes. A record five storms hit Florida in 2004, causing $40 billion in damages and nearly 100 deaths. Hurricanes have recently battered the state, leading to billions of dollars in insurance claims.
Hurricane Ian, a Category 5 hurricane that destroyed hundreds of homes in 2022 as it battered the Fort Myers area, caused prices to rise and insurers to leave the state. The second-costliest hurricane after Katrina, Ian led insurers to raise rates by 42% the following year. Even before Ian, home insurance rates had been climbing at an average of 33% per year due to numerous lawsuits and fraud.
High insurance rates and the departure of insurance companies from Florida can largely be blamed on the high cost of repairs following severe weather events. As more frequent storms do more damage, homeowners are competing for labor and materials. “Not only is it more likely that your property is damaged, but it’s also more expensive to fix when it is damaged,” McCartney says. “Insurance companies know all this, of course, and therefore choose to either charge a lot upfront or just leave the market entirely.”
How Are Home Insurance Rates Shaping Florida’s Housing Market?
Some experts believe that high insurance costs are stopping people from moving to Florida. In South Florida, many residents who decided to sell their houses after Hurricane Ian in 2022 have been unable to find buyers. Elevated mortgage rates, increased inventory, and the high cost of insuring properties are keeping some prospective buyers away.
While the price of single-family homes is still rising, condominium prices in Florida have dropped due to high insurance costs and homeowners association (HOA) fees. Condo associations have faced more rigorous building codes since the 2021 Surfside condo collapse in Miami. This leaves owners with the cost of insuring their own properties while paying high HOA dues.
Some homeowners are opting out of home insurance entirely. Medders considers this to be a risky gamble. “A lack of home insurance not only threatens the value of the home as an asset but also could leave a family with nowhere to live at a time when they are experiencing other hardships,” Medders says.
How Does Climate Change Impact Home Insurance?
Climate change-caused issues often increase hurricane-related damages. As glaciers and ice sheets melt, the volume of ocean water increases, and sea temperatures rise. Nation says that “higher-temperature waters evaporate more quickly, which can lead to rapid intensification of storms, causing storms to increase in size and frequency.”
Warming water temperatures are causing more intense storms with a greater potential for significant storm surges and flooding. This can take place during storms and even during high tides as sea levels continue to rise. Flooding can damage residences along with important infrastructure such as roads, sewage treatment plants, water supplies, and power plants.
Climate change is altering wind patterns, leading to storms that stay in one place for longer. Most people think of hurricanes as major wind events, but once the wind has slowed, storms can take time to move away. This leads to huge amounts of rainfall in already saturated areas and widespread flooding. Hurricane Ian is one example—the Federal Emergency Management Agency (FEMA) paid almost $4 billion in flood insurance claims.
Tips for Moving to Florida
While the average cost of home insurance across the U.S. is $1,784 per year, that figure rises to $7,788 annually in Florida. If the Sunshine State is still calling your name, here are some tips that can help to smooth out your move.
- Research the city: Some inland cities are more climate resilient, meaning you could find lower home insurance rates. For example, data from FEMA shows that Gainesville is located in a moderate-risk zone. The picture is much different in Tampa and Miami, which are both listed as very high risk.
- Don’t buy a house in a flood zone: FEMA flood maps show areas that are more likely to flood. Nation suggests familiarizing yourself with online tools that show sea level rise. “Homeowners should also consider buying optional flood insurance policies, even if they are outside of flood zones or not required to by a bank to protect themselves,” Nation says.
- Weather-proof your house: It’s tough to stop a Category 5 hurricane from doing any damage, but homeowners can still take measures to protect their properties. Going into hurricane season, trim your trees, clean your gutters, and consider upgrading windows and doors to meet the “fortified home” standard. “Homeowners can take steps to ‘harden’ their homes based on recommendations from state building officials,” Jones says. “This means retrofitting your home to meet the ‘Fortified Home’ standard to reduce the impact of wind and hurricanes.”
- Carefully research your insurance policy: According to Sastry, whose research focuses on climate finance and real estate, homeowners may not be aware of what their insurance coverage includes. “Many homeowners don’t realize that their homeowners insurance policy does not cover flood damage, for example, and only learn this crucial information after a natural disaster hits,” Sastry says. Also, ensure that you have enough coverage. “There is evidence that insurance coverage limits do not change very often, meaning some households may be underinsured without realizing it. Households should check that they have adequate coverage to cover the full replacement cost of their house,” according to Sastry.
Our Conclusion
Planning a move to Florida doesn’t need to be scary if you know the risks and costs involved. It’s a state with year-round mild temperatures, plenty of entertainment options, and stunning natural beauty. Budgeting for extra insurance costs, being aware of flood zones, and knowing how to protect your house will help you avoid future headaches as a Florida homeowner.
Our Experts
Molly Nation
Molly Nation, Ph.D., is a professional at the intersection of science, policy, and education. Currently serving as a science and technology policy fellow at the American Association for the Advancement of Science (AAAS), Nation contributes her expertise to the Millennium Challenge Corporation as a climate change- and nature-based solutions advisor. She previously served as a translational climate science fellow at the Environmental Protection Agency (EPA) Office of Research and Development, conducting applied action research on social systems and collaborating with diverse communities to address climate challenges. Nation is an associate professor at Florida Gulf Coast University, specializing in environmental education within the Department of Ecology and Environmental Studies. She holds a Ph.D. in curriculum and instruction in science education from the University of South Florida.
Ken Johnson
Ken Johnson, Ph.D., serves as the associate dean of graduate programs at Florida Atlantic University’s College of Business. He is a well-known scholar with numerous publications on the U.S. housing market, real estate brokerage, transactional real estate, mortgage markets, and real estate investment. His recent articles have appeared in Real Estate Economics, Journal of Real Estate Finance and Economics, Journal of Housing Economics, Journal of Real Estate Research, Journal of Housing Research, The Appraisal Journal, Journal of Real Estate Practice and Education, Journal of Real Estate Portfolio Management, and Journal of Real Estate Law.
Parinitha Sastry
Parinitha (Pari) Sastry, Ph.D., is currently an assistant professor of finance at Columbia Business School. Her research is at the intersection of climate finance, financial intermediation, and real estate. Prior to beginning her academic position, she spent a year at the Department of the Treasury as a climate finance postdoctoral fellow. She received her Ph.D. in finance from the Massachusetts Institute of Technology (MIT) and her B.A. from Columbia University. Prior to her Ph.D., she worked at the Federal Reserve Bank of New York, the Brookings Institution, and the Task Force on Climate-Related Financial Disclosures.
Ben McCartney
Ben McCartney, Ph.D., is an assistant professor of commerce at the University of Virginia McIntire School of Commerce and a visiting scholar at the Federal Reserve Bank of Philadelphia. His research investigates how social interactions, civic engagement, and politics connect household finance, real estate, and urban economics. His work has been published in the Journal of Urban Economics, Management Science, and The Review of Financial Studies. It has also been presented at the American Finance Association (AFA) annual meeting, the American Real Estate and Urban Economics Association (AREUEA) annual conference, the National Bureau of Economic Research (NBER) summer institute, the Society for Financial Studies (SFS) cavalcade, and the Urban Economics Association (UEA) annual meeting. His work has been featured in Al Jazeera, The Globe and Mail, and The New York Times. He teaches financial management, a core class covering financial statement analysis, the time value of money, and the weighted average cost of capital, in the commerce program at McIntire.
Dave Jones
Dave Jones is director of the Climate Risk Initiative at UC Berkeley School of Law’s Center for Law, Energy, and the Environment (CLEE). Jones was the senior director for environmental risk at The Nature Conservancy from January 2019 to June 2021 and a distinguished fellow with the ClimateWorks Foundation. Jones served as California’s insurance commissioner from 2011 through 2018. He founded and chaired the Sustainable Insurance Forum (SIF), an international network of insurance regulators developing climate risk regulatory best practices. Jones was the first U.S. financial regulator to require disclosure of investments in fossil fuel assets due to concerns about climate change-related risk and the first to conduct climate-risk scenario analysis of insurers’ investment portfolios. Jones has testified before Congress, state legislatures, the G20 Financial Stability Board, and numerous regulatory agencies about the need for financial regulators to address climate change and the risks it poses to the financial system. Jones is a graduate of DePauw University (B.A), Harvard Law School (J.D.), and Harvard’s Kennedy School of Government (MPP).
Lori Medders
Lori Medders, Ph.D., serves as the Joseph F. Freeman Distinguished Professor of Insurance and as chair of the Department of Finance, Banking, and Insurance for the Walker College of Business at Appalachian State University (ASU). She also served as director of the Walker College of Business honors program. Prior to joining ASU, she was on faculty at Florida State University, Georgia State University, and Georgia Southern University. Medders serves on the board of directors for the American Association of Water Distribution and Management and chairs its education committee. She also serves as chair of the American Risk and Insurance Association’s Risk and Insurance Teaching Society, an international organization devoted to excellence in the teaching and learning of risk economics and related disciplines. Medders is a past president and board member of the Southern Risk and Insurance Association, which supports research on topics related to risk and insurance, as well as past chair of the Florida Commission on Hurricane Loss Projection Methodology and its statistics expert.
