When buying a new home, buyers are considering home price, taxes, and HOA/CDD fees. It is rare that you’ll hear a home buyer ask their Realtor, “Will homeowners insurance greatly affect my monthly payment?”
Prior to 2019, homeowners insurance was a typical, somewhat predictable number for home buyers. While it fluctuated, it was rarely a deal-breaker when it came to completing the purchase of a home. But today, homeowners insurance in Florida is a wild card.
Hurricane Irma in 2017 began a downward spiral in the homeowners insurance industry. Huge claims paid out during the years following meant that insurance companies were strapped for cash. On top of that, lawsuits exploded. Lawyers have the ability to charge homeowners insurance companies far higher prices and this has further taxed their financial reserves. And, of course, solicitation from roofers has caused more people to charge their new roofs to their homeowners insurance companies.
The cost of homeowners insurance in Florida has increased by 32.5% since 2016, on average.
Some people’s premiums have doubled! But the worst part is that many new home buyers cannot even obtain reasonable homeowners insurance. They might be turned down for the age of the roof, which coincidentally used to be commonplace when the roof was 15 years or older, but now they’re being turned down for homes with roofs as young as 5-years-old! They also might be turned down for things like aluminum wiring or having a claim on a completely different house!
Homeowners insurance is provided by private insurance companies. An insurance broker will shop these different companies and will know which companies will cover what types of homes. The private insurance agencies have their own sets of rules and standards that remain fairly predictable for brokers to shop. But now that private insurance has tightened its restrictions, home buyers are turning to the state funded homeowners insurance, Citizens Property Insurance.
Citizens Property Insurance is funded by taxpayers and is meant to be a last resort. However, because private insurance is becoming more and more difficult to obtain, Citizens Property Insurance is now being used more and more. While it covers much the same way private insurance does, it does set a liability limit of $100,000 and the paperwork is copious, which means some insurance agents won’t even write them!
Too many transactions are halted shortly before closing because homeowners insurance isn’t yet bound. But you can avoid this fate with a Realtor who understands the homeowners insurance market and has an incredible insurance broker at their disposal. Reach out to a Round Table Realty agent for a Realtor who will begin working on your homeowners insurance with you as soon as you go under contract, guiding you not only through the home buying process but the home insurance process as well!