Property buyers are stepping back from otherwise affordable homes due to high coverage costs.
Home insurance agents aren’t the only professionals feeling for their clients as rates continue to rise to crisis levels in Florida. Real estate agents are also finding that their customers are frustrated with the additional expense of a prospective new house when they see what their premiums would be.
Floridians looking to buy their dream houses aren’t just stressed about the price of the property.
Property prices are already climbing fast, but even among those who could afford those prices, when they receive a quote for the home insurance they would require in order to get a mortgage for the purchase, they often find that the property isn’t nearly as affordable anymore.
That said, high premiums aren’t the only challenge prospective homebuyers are facing. Some would say that simply being able to find a policy – even an expensive one – would be enough for them. However, coverage isn’t always available and deals risk falling through when an insurer can’t be found to cover the property.
As a result, the deeply problematic issues in the Florida property insurance market are trickling over into the real estate market as well.
Florida residents are already paying the highest home insurance prices in the country.
The average annual premium in the state this year was $6,000, which was a year-over-year increase of 42 percent. Moreover, it was 3.5 times more expensive than the national average, which was $1,700.
At the foundation of Florida’s coverage crisis are increases in reinsurance costs and in litigation fees. Insurers that are unable to keep up with these skyrocketing expenses have been either withdrawing from the state or are increasing their rates to cover them, meaning that the cost is shifted to their customers.
Florida recently repealed a provision called the one-way attorneys fee that had long required home insurance companies to pay a reasonable portion of a policyholder’s litigation fees if they are able to secure any amount of money against the insurer. Legislators had viewed this as an opportunity to shrink coverage costs, though Florida residents who sue their insurers following a claim might find that they will face a new financial burden when doing so.