Insurance premiums are going up across the State of Florida. This is happening for a variety of reasons which are impacting home and car insurance policies. After the past year of the pandemic, the last thing you want is an unexpected bill or rate increase. However, don’t react too quickly. Premium hikes are a state-wide issue, so jumping ship won’t solve the problem.
Why Premiums Are Increasing
There are many reasons insurance premiums are going up throughout Florida. There is a good chance your premium has increased due to an industry-wide change that can’t be fixed by changing your insurance provider.
A Rise in Contract Dispute Claims
Contract dispute claims occur when a home is repaired improperly or when there is no damage to the home in the first place. These scenarios usually only happen when a dishonest company is involved. Even though there is only a small number of fraudulent contractors in Florida, they can have a significant impact on state insurance rates.
Fraudulent companies promise large repairs for the price of the insurance deductible. after the contractor inspects a roof, they may find an issue or two but claim the whole roof needs replacing. This leads to a discrepancy in the claim which the insurer will either have to pay out or fight in court.
In Florida, just 45,000 lawsuits were filed against insurers in 2018. In 2020, that number jumped to almost 150,000. These fraudulent companies have led to more than $1 billion in losses for Florida insurance providers. Unfortunately, this leads to rates going up across the state for all homeowners.
Extreme Weather Patterns
The Florida Office of Insurance describes the state as one of the most complex insurance markets in the world. This is partly because of the unique weather the coastal state experiences. With multiple hurricanes over the past several years, catastrophe claims have skyrocketed.
Combined with increased home value, this results in insurance companies paying out significantly more than in previous years. Hurricanes Irma and Michael caused $20 billion in damages. Even with rate increases, insurers are often taking a hit every hurricane season. The majority of insurers in Florida have been posting underwriting losses for the past five years.
Predatory and fraudulent contracting companies often advertise heavily after these storms, even going door-to-door to generate work and insurance claims. This practice doubles down on the losses for insurance providers following catastrophic storms.
What To Do About Your Premium Increasing
The first thing you should do if you are concerned about your premium increasing is to call your provider. Reacting too quickly and seeking a policy elsewhere can put you in a sticky spot if you need to make a claim. Most cheaper policies will have less coverage and may even leave you with a coverage gap.
Your insurance agent can discuss what part of your coverage is most expensive or whether a claim you filed led to the increased premium. Most agents are more than happy to find a policy that suits you and your budget without leaving you unprotected. If you switch providers in a snap decision, you will lose any loyalty discounts that may be associated with your policy. Additionally, you might not be able to find comparable insurance plans and end up paying more for less.
If you find out you are getting a rate increase, call your provider and make sure you understand why. After you have a conversation, you’ll most likely need to sit tight. It’s not just you and it’s not just your agent or carrier. Insurance rate increases are a state-wide issue for 2021.
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