Lawsuits against Florida property insurers raising rates for everyone

Homeowners insurance premiums are soaring in Florida. In some cases, homeowners are facing increases costing hundreds more annually.

Judith Tynski of south Fort Myers is one of those people. Her rate in 2020 was $1,463. The renewal rate was $2,105. That’s more than a 40% jump.

“I’ve never had anything go up that much,” Tynski said.

And for Tynski, it is especially difficult. She and her husband are retired and live on a strict budget.

“I don’t like paying any fees,” Tynski said. “Even if it’s a dollar, I will call and argue.”

Why the increase?

There are a few pieces to the price hike puzzle.

First, there are claims. A normal part of doing business.

There is also Assignment of Benefits, where homeowners sign away their rights. This allows the contractor to take over communication with the insurance company.

And that can lead to pricey lawsuits, making the industry more volatile. More volatility means reinsurance: The insurance company’s insurance, costs also go up.

“A $15,000 roof job could become a $75,000 roof job if litigation is involved,” said Mark Friedlander, with the Insurance Information Institute.

Friedlander says a court ruling also makes it easier for policyholders to get a new roof when they might only need a repair.

“A few shingles can lead to a $75,000 roof if litigation’s involved,” Friedlander explained. “Litigation is clearly the biggest issue right now.”

This year, around 150,000 lawsuits were filed against Florida insurers compared to 92,000 in 2019 and 45,000 in 2018.

And more lawsuits mean more losses.

Last year, 60 Florida property and casualty insurers reported a loss of $700 million. This year, we’re on pace to hit $1 billion.

Friedlander says, until there is tort reform, it’s likely the industry will continue to spiral.

Consumers’ options

Fewer carriers are writing new policies in Florida. The companies still underwriting are jacking up prices for people who carry a higher risk, such as Tynski who has a 15-year-old roof.

“I was raised in a construction family,” Tynski said. “My husband is in construction, and you don’t do things until it needs to be done.”

Tynski shopped around, finding a carrier who will only raise her price $300 instead of $600. She’s switching.

RESOURCE: Some Florida homeowners shocked over premium hikes, but changing could leave you worse off

While no one has a crystal ball, experts say plan for another rate hike next year because losses are not under control. Until they are, consumers are going to pay for it.