From homeowners to lawyers to insurance companies themselves, the insurance crisis runs deep in Florida.
Rohom Khonsari lives in Pinellas Point. He was left scrambling for the last month trying to find a new insurance company to cover his home after his coverage was dropped.
“So I didn't think anything of the notices that I was getting. I opened one at the beginning of the month and it said that the company was going bankrupt, and my policy was being canceled and I needed to find a new policy by May 28,” explained Khonsari.
Khonsari’s policy renews in November, and he was frantic especially since he lives in a flood zone. He's trying to pick up the pieces, like thousands of other homeowners in Florida. It’s a rat race mortgage brokers are trying to walk their clients through.
“A lot of clients that are coming to me where they used to have five or eight different carrier options to choose from various premiums, various coverages are down to probably two or three, and in some instances only one,” said Michael Koopman, from Cross Country Mortgage.
That one option in most cases is Citizens Property Insurance. It's the state-backed agency that is now seeing a flood of homeowners who can’t find coverage anywhere else. That's not good because if a hurricane hits Citizens, which is basically backed by you the taxpayer, could end up having to pay out billions of dollars in claims.
“Florida, because it is a hotbed of people to come to, it's been widely publicized through the pandemic. Everyone's moving to Florida. Great weather, no state income tax, affordable housing up until now,” said Michael.
Now Florida lawmakers find themselves in a race against time and climate, as they scramble to pass some sort of deal or legislation as hurricane season soon begins.
Insurance Agent Jake Holehouse said don’t blame the insurance companies, but instead blame the lawyers who are feasting on Florida’s laws which require insurance companies to pay for a full roof replacement if there is any type of storm damage.
“What essentially occurs is you have roofers in areas such as like the villages in Orlando and Lutes, where they go into a neighborhood that was built in 2004. So they know that every roof in that neighborhood needs to be replaced in the near future. And they just find one day in the past two to three years where they think hail could have occurred. And so they go door knock and they sign on a claim by doing a free roof inspection. And they represent that they're part of your insurance company,” explained Jake.
He added, “They essentially get the homeowner who doesn't know any better to sign on this claim. The insurance company tries to deny the claim because it's wear and tear. It was never intended to be covered in the policy and it's not covered in the policy in any state except for Florida. And so then what happens is essentially the carrier goes into litigation on it.”
Florida has over 100,000 lawsuits against insurance companies, while the rest of the country combined has roughly 1,000. This is a big reason why insurance companies are either going bankrupt, raising rates or canceling coverage.
“Everyone thinks this has happened overnight. It didn't. We've been fighting this real crisis since March 2015. Over seven years, and each year the referrers and the lawyers are getting more and more expert at the games that are being played. Moving well beyond Central Florida to the entire state. And the gamesmanship continues because it can,” explained Bob Richards, CEO of American Integrity
Either way, you’re the one paying the price. You’re the one whose home is on the line.
- Florida receivership currently handling 8K claims, 2K lawsuits in homeowner insurance crisis
- Property insurance companies continue to drop Florida customers
- 80K lawsuits filed against insurance companies in 2020, doubling homeowners insurance premiums
- Florida roofing company encourages homeowner to make insurance claim for storm damage via text