Homeowners’ Insurance Mayhem And Ballooning Property Taxes In Sunshine State
Editor’s note: Contributing columnist, Steve Nicklas, expresses his views and insight on various topics in Marketplace.
— Steve’s Marketplace —
Here’s a tasty tidbit that Ron DeSantis is omitting from his menu of merit, as he races around the country in a wilting campaign to become U.S. president.
Under his glorified watch as Florida governor, homeowners’ insurance costs have more than tripled – to the highest in the country. With no solution in sight.
DeSantis is rightfully touting his economic, pandemic and anti-woke accomplishments in his presidential run. But problematic homeowners’ insurance premiums are spiraling like a West Texas tornado, dwarfing these other accolades to most Sunshine State residents.
In Florida, it’s not uncommon for homeowners’ insurance to exceed $5,000 a year. Some policies inexplicably approach $10,000. With a growing list of exclusions. On average, homeowners’ rates are three times higher in Florida than in other states.
But the pace of increase is worrisome. With a 206 percent rise over the last five years in Florida, homeowners’ insurance rates are growing by 40 percent per year. Imagine the numbers in another five years.
The costs become prohibitive. To complicate matters further, six major insurers in Florida recently became insolvent. Still others are looking for an exit ramp. However, they profit nicely from other kinds of insurance, like for your automobile.
Not to be overlooked, federally backed flood insurance is becoming stretched by the rash of natural disasters. Severe price hikes could inevitably follow.
In other words, it’s getting expensive to live in Florida – if you can afford a house. Even renters are not immune; landlords pass on increases in taxes, insurance, fees, etc. to renters. Especially if the renter is a business.
Despite unbridled prosperity and growth, Florida cities and counties and school districts are hiking property taxes and fees as quickly as the public can stomach it. While a gold rush of newcomers from around the U.S. pads the property tax rolls.
In what appeared to be lip service, DeSantis called special sessions in consecutive years over the conundrum of homeowners’ insurance. Band-aids were applied to slow the bleeding, with no major surgery.
It appears the legal lobby is too powerful in Florida. DeSantis has displayed a willingness to get cozy with well-heeled donors during his campaign. And lawyers are a significant part of the donor crowd.
However, DeSantis has faced little criticism over his inability to guide the state through the insurance mayhem. Most of his attention – as well as the national media’s – is on his personal tussle with Disney.
DeSantis even torpedoed a $2 billion investment by Disney for a new campus in Orlando to house 2,000 workers. Florida has few prominent Fortune 500 employers, compared with other large states. This doesn’t help.
When asked about it, DeSantis’s press secretary reportedly talked about “looking for ways to lower costs and draw more insurers to the state.” This isn’t working. In fact, popular Farmers Insurance is the latest to leave the state, impacting 100,000 policies.
DeSantis has failed monumentally to fix the insurance market, even when Republicans have a powerful grip on both state houses. While the regularity of hurricanes complicates things, Florida leads the nation in insurance-related lawsuits. In fact, Florida accounts for 80 percent of these lawsuits in the U.S., while representing only 9 percent of claims.
Fraudulent insurance activity coupled with costly litigation are the primary reasons insurers are leaving the state. It’s a “man-made catastrophe,” says one top insurance executive.
State-funded Citizens Property Insurance Corp. is already one of the largest insurers in Florida. Citizens is designed as an insurer of last resort, when private insurance cannot be obtained. Through Citizens, however, the state becomes the insurance company – an unaffordable proposition at some point.
For those with private insurance, the policies are often riddled with deductibles and limits in coverage through widespread exclusions. Most are unannounced and unexplained to policy holders.
Meanwhile, high-level politicians like DeSantis don’t broadcast these insurance shortcomings. Ironically, DeSantis had to postpone his presidential campaign to return home after the recent hurricane.
You suspect he hoped for a bump in his languishing polls. He gallantly appeared on TV interviews and in press conferences in support of impacted homeowners and businesses. As blue tarps still cover roofs from last year’s hurricane.
And DeSantis gloats that everything is perfect in Florida. He’s right in a lot of ways. Except for the spiraling property taxes, the ballooning insurance costs, the inability to repair hurricane damage before another comes ashore.
Anyhow, his focus is not on Florida residents right now, but on desperately winning over residents in other states. For their votes in his withering campaign.
In his absence, it feels a little like being uninsured. And that leaves a lousy aftertaste.
_____
Steve Nicklas is the managing partner of Nicklas Wealth Management in Fernandina Beach. He is also an award-winning columnist. His columns also regularly appear in weekly newspapers in Northeast Florida and in Southeast Georgia, and on his website at www.SteveNicklasMarketplace.com. He has published a book, “All About Money,” of his favorite columns from the past 20 years. The book is available on Amazon. He has also done financial reports for area radio stations and for National Public Radio in Jacksonville. He can be reached by email at [email protected] or by phone at 904-753-0236.