Florida’s Home Insurance Crisis and How Climate Change May Play a Role

By Wylie Saviello

After years with the same insurance company, Leah Melanie Nelms received a cancellation notice. An inspector was sent to her house to see if it was insurable, and they said she needed a new roof, or they would cancel her coverage. She dipped into her retirement savings to spend $19,000. 

“[Our roofing guy] came and said, ‘to be honest with you, your roof is fine, but I understand that insurance companies are going to have you replace it if it’s more than 20 years old,’” Nelms recalled. “You can try to find a different insurance company, but they’re going to do the same thing.” 

Nelms is an example of how Florida’s property and home insurance crisis affects residents, from spending money to replace roofs to seeing their policy prices skyrocket. 

For wealthy beach house owners, insurance demands like these may be more affordable and not as much concern, but for Leah Nelms and many other Floridians, they have significant impacts.

Home insurance costs have gone up 72% in Florida over the last five years, according to personal finance analysis website ValuePenguin. Property insurance reform passed in 2022 and 2023 are starting to stabilize the market, but prices are still high and property insurance costs remain a top concern for Floridians, say the Miami Herald and the Palm Beach Post. 

People on fixed-income or lower-income homeowners face significant struggles. Insurance bills have doubled and, in some cases, tripled in the last three or four years, according to Bill Lazar of St. Johns Housing Partnership, which develops and preserves quality housing while providing support for residents with low and moderate incomes, the elderly, disabled and veterans. 

“It’s literally gone up that much. I’ve had people tell me that it used to be $2,500 a year, and now it’s over $6,000,” Lazar said. “And that’s an incredible challenge for some folks.”  

Florida’s property insurance crisis arguably took off in 2004, when the state suffered a historic hurricane season in which four hurricanes made landfall within a period of just six weeks. Hurricane Charley, the first of the season, entered Florida as a category four hurricane and exited as a category one hurricane. 

“The conventional wisdom was that once it gets over land, it dies. But that storm didn’t, and it changed the way the market went. State Farm pulled out of the market. So did Allstate. So did a lot of the companies you see commercials for,” said Ashley Casey of the Casey Agency. 

Casey was working as a catastrophe claim adjuster for State Farm, but after 2004’s hurricane season, he became an independent agent and went on to start the Casey Agency, which helps St. Augustine residents find the best insurance options through Brightway Insurance. 

Florida’s property insurance crisis has developed over time, but recent years have been particularly tough. 

“The last four years have been the worst four years for our customers in my 30-year career,” Casey explained. “Between 1,500 and 1,750 people lost their homeowners insurance because their insurance carriers went bankrupt or they were insolvent.” 

There are few national insurance companies left in Florida, and those that do remain often use subsidiaries and limit new policies. 

“There’s barely any national companies left in Florida that will write new business, and they definitely won’t near the coast,” said Jim Bayer, who started working in the insurance industry 42 years ago. “The storms are bigger and more frequent, and insurance companies just can’t make any money here.” 

Local resident Peggy Rickly had been insured by State Farm for many years with a reasonable bill, and then they left. “If you live within 3 miles of the water, they wouldn’t insure you anymore … after you make a claim, you’re doomed,” she explained. 

The crisis is affecting some more than others, especially as the demographics of St. Augustine change. 

“In 2008, the average price of a home was $200,000 to $300,000 [on Anastasia Island], and now it’s $700,000 to $800,000. Our customer base now has the appearance of a more wealthy community, and [insurance] carriers tend to like that type of business,” Casey said.

Two of the biggest issues residents face are higher prices and more aggressive inspections, according to Lazar. Many lower-income communities are in low-lying land and have a much harder time affording insurance to protect them from the increasingly severe hurricane seasons. 

For residents who do have a mortgage, their banks who hold the mortgage require them to keep the property insured. For long-time residents who have paid off their mortgages and are now seniors living off fixed income, more and more are choosing to opt out of home insurance altogether. 

About 15% to 20% of Florida homeowners are uninsured, part of a risky trend that is a direct result of the state’s property insurance market crisis, according to WUSF of NPR. Lazar has noticed a similar trend in St. Augustine, often running into people who don’t have coverage because they don’t have room for property insurance in their tight budget. 

As climate change contributes to more destructive hurricane seasons, the life of shingle roofs lessens, and many insurance companies take advantage of that. 

“It’s not just that rates are going up, we’re seeing much more aggressive inspections from property insurance companies who are going, ‘Your roof is 15 years old. It’s not leaking, but it’s old and we want you to replace it or we’re not going to give you insurance,’” Lazar explained. 

The Housing Partnership installs metal roofs to try to combat this issue, but income-strained communities are still put into crisis by other issues. One of the biggest challenges in Florida is the heat, with each summer bringing record high temperatures. 

“We’ve got elderly people sitting in their homes, and if their AC system isn’t working right, if that house can’t properly cool itself for less than a couple hundred dollars a month, those people are going to be in crisis,” said Lazar. “Climate change has a huge impact, and the insurance industry knows it.”