Why is Home Insurance in Florida so Expensive?

Homeowners across Florida are feeling the sting of skyrocketing insurance premiums. The average cost of a Florida home insurance policy has reached $6,000 per year—far above the national average of $1,700. But why? The answer is complex, involving a mix of legal, financial, and natural factors that have turned Florida into one of the toughest insurance markets in the country.
1. Florida’s Litigation Problem: A Lawsuit Factory
Florida has long been the nation’s leader in insurance lawsuits. In 2019, the state accounted for 79% of all U.S. homeowners insurance lawsuits, despite having only 9% of the claims. This was largely due to Assignment of Benefits (AOB) abuse, where contractors took over claims and inflated costs, leading to massive litigation. Until recently, Florida law allowed attorneys to collect one-way legal fees, meaning insurers had to pay their opponent’s legal costs no matter the case outcome. These incentives fueled a litigation explosion, driving insurers into financial distress and forcing premiums higher.
2. Insurance Companies Going Bankrupt or Leaving
As lawsuits drained resources, many insurance carriers went bankrupt or left the state. Since 2020, over a dozen Florida property insurers have failed, and big national companies like Farmers Insurance have pulled out entirely. With fewer competitors, remaining insurers have been forced to raise rates drastically to stay afloat.
3. Reinsurance Costs Have Skyrocketed
Reinsurance—insurance for insurance companies—is critical for covering hurricane-related losses. But Florida’s high risk has made reinsurers wary, leading to price increases of 30–50% per year. These higher costs are passed directly to homeowners, further driving up premiums. The state created a $2 billion reinsurance fund to help insurers, but long-term stability remains uncertain.
4. Legislative Reforms: Fixing the Market, But Slowly
Recognizing the crisis, Florida lawmakers passed major insurance reforms in 2022 and 2023, including:

• Eliminating one-way attorney fees, reducing incentives for lawsuits.
• Banning AOB contracts, stopping third parties from taking over claims.
• Providing state-backed reinsurance to lower costs for some insurers.
• Raising rate caps for Citizens Insurance to move homeowners back into the private market.

While these measures should help over time, relief has not been immediate, and premiums remain high.
5. Citizens Insurance: The Growing Financial Risk
With private insurers struggling, more Floridians are turning to Citizens Property Insurance, the state-run “insurer of last resort.” In 2019, Citizens had 420,000 policies.  As of 2/28/25, Citizens' policy count now stands at roughly 847,000.  This large number of policies is dangerous because if a major hurricane depletes its funds, every Floridian with insurance could be hit with surcharges to bail it out. Lawmakers are now trying to reduce Citizens’ size by making it harder for homeowners to remain insured by it.
6. Natural Risks, Inflation, and Population Growth
Beyond legal and financial troubles, Florida’s natural risks keep insurance prices high:

• Hurricanes: Florida is the most hurricane-prone state in the U.S., with storms like Ian (2022) causing over $60 billion in damage.
• Inflation & Construction Costs: Home rebuilding costs have jumped 40-55% in recent years, meaning claims are far more expensive to cover.
• Population Growth: More homes, more people, and more property value in high-risk areas lead to greater insurance exposure.

Conclusion: High Costs Are Here to Stay, but We Can Help
Florida’s insurance crisis is the result of years of excessive lawsuits, insurer failures, reinsurance struggles, and natural disasters. While recent reforms aim to stabilize the market, premiums won’t drop overnight. Homeowners must navigate this complex landscape carefully. Understanding these challenges is the first step in making informed decisions about coverage.  That’s where we can help.  Our agency’s professional and local risk managers can help guide you through Florida’s troubled insurance market.  Our agency exists as a resource for our clients.  We can compare rates when you receive your renewal, and help you stay in front of underwriting issues on your policies.  Give us a call or click below to request a quote for your home. 

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