Many people come to Florida to vacation, enjoy the sunshine and relax. Many of these visitors eventually move here permanently to enjoy the sandy beaches, visit the many theme parks and explore the beautiful Florida state parks. However, once they come across their first scaly green monster with very large teeth, they start to question their decision to live there.
Unfortunately, insurance rates in Florida are like the alligators of the state. They’re big, dark, and ugly. Florida is known to have the highest insurance rates in the country. You might be thinking, “that’s because the big bad insurance company wants to make as much money as possible.” While insurance companies do need to make a profit in order to be able to pay claims, there are actually two other main drivers of these higher rates: risk and fraud.
Risk in Florida is higher than other states because it has 1,350 miles of coastline that lies between two warm bodies of water. Along these coastlines, reside 80% of the sunshine state’s businesses as well as three quarters of Floridians’ homes. That equals a total of 2.8 trillion dollars in property value. Now, picture a hurricane blowing through the state of Florida and you can see how the damage would be very expensive. This results in higher insurance rates because Florida has a higher risk of damage.
However, potential risk isn’t the only reason why Florida’s insurance rates are so high. The biggest alligator of them all is fraud. Many times, unscrupulous contractors throughout the Sunshine State try to take advantage of innocent insureds. The contractor presents an issue to a homeowner, such as hail damage on their roof, or water damage from leaky pipes, to tell them that they will repair the damage and handle everything with the insurance company. They have the homeowner sign what is known as an “assignment of benefits” so the contractor can fix those unnecessary repairs. Then they team up with a trial lawyer who then submits the inflated claim to the insurance company. If the insurance company decides to pay the overinflated claim, it contributes to higher rates. If the insurance company does not pay the claim, often they have to face litigation from attorneys, again raising the rates that all Floridians must pay. Don’t let that alligator into your home. Be smart before you sign your name on that shady contract.
Florida is such a beautiful place to live, but can be hard to enjoy with those scary. scaly monsters trying to take advantage of homeowners. Remember, we cannot control risk but we can control fraud.Don’t be lured by that seemingly docile monster snoozing by the edge of your retention pond. Just like it’s always best to give alligators a wide berth, do the same with those seeking to inspect your home for fraudulent damages. If you have any questions on how to mitigate your costs or reduce your risk of fraud, call your Bankers agent today!