Daniel Kelly and his wife bought a 1977 semi-detached mobile home in May for about $83,000 in Tropicana Sands, a community for people 55 and older. Fort Myers, Florida. But he ran into roadblocks when he tried to insure himself.

Managers at Tropicana Sands told him he likely wouldn’t be able to find a carrier to offer a policy because the house was too old. He said he contacted an insurance agent in Florida who searched and couldn’t find anything.

“I can insure a car from the 1940s, why can’t I insure this one?” said Kelly.

Kelly was lucky his trailer was largely spared Hurricane Jan apart from some flood damage. But for many Floridians whose homes were destroyed, they now face the daunting task of rebuilding without insurance or paying even higher prices in an already struggling insurance market. Wind and storm surge losses from the hurricane could be between $28 billion and $47 billion, making it the costliest storm to hit Florida since Hurricane Andrew in 1992, according to analytics firm CoreLogic.

Even before Ian, Florida’s home insurance market was facing billions in losses from a series of natural disasters, rampant litigation and rising fraud. The dire situation has put many insurers out of business and forced others to raise prices or tighten limits, making it harder for Floridians to get insurance.

Those who manage to insure their homes see costs rise exponentially. Even before Hurricane Ian hits in 2022, the average annual cost of a homeowner’s insurance policy in Florida was expected to be $4,231, nearly three times the U.S. average cost of $1,544.

“They’re paying more for less coverage,” said Tasha Carter, Florida Consumer Insurance Advocate. “It puts consumers in a difficult situation.”

Costs have become so high that some homeowners have foregone insurance altogether. According to the Insurance Information Institute, an insurance industry-funded research organization, about 12% of Florida homeowners do not have property insurance — or more than double the U.S. average of 5%.

Florida’s insurance industry has seen net underwriting losses exceed $1 billion each year for two consecutive years. A number of property insurers, including six this year, have become insolvent and others are leaving the state.

As of July, 27 Florida insurers were on a state watch list because of their shaky finances; Mark Friedlander, director of communications for the Insurance Information Institute, expects Hurricane Ian to drive at least some of them into insolvency.

The insurance industry argues that overzealous litigation is partly to blame. Loopholes in Florida law, including fee multipliers that allow attorneys to collect higher fees for property insurance, have made Florida an overly litigious state, Friedlander said.

Florida currently averages about 100,000 homeowner’s insurance lawsuits per year, he said. By comparison, it’s only 3,600 inches Californiawhich is almost twice the population of Florida.

The Florida Office of Insurance Regulation said the state accounts for 76% of the nation’s homeowner’s insurance claims, but only 9% of all homeowner’s insurance claims.

“Plaintiffs’ attorneys in Florida have historically found ways to circumvent any efforts to curb violations of the legal system, making it possible that ongoing reforms will be needed to further stabilize the insurance market,” said Logan McFadyen of the Property & Casualty Insurance Association of America.

But Amy Boggs, chair of the real estate division of the Florida Association for Justice – an advocacy group – said the insurance industry is also to blame for refusing to pay claims. Boggs said homeowners are contacting attorneys “as a last resort.”

“No policyholder wants to be involved in years of litigation just to get their homes back,” she said. “They go to lawyers when their insurance company underpays their claims and they can’t recover.”

Rampant fraud — especially among roofing contractors — has also driven up costs. Regulators say contractors routinely go door-to-door offering to cover homeowners’ insurance deductibles in exchange for filing a full roof replacement claim with their property insurance company, claiming storm damage.

Things got so bad with insurance that Florida Gov. Ron DeSantis called a special session in May to address the issues. The new laws limit the rates attorneys can charge on some property insurance claims and require insurers to insure homes with older roofs — something they have stopped doing because of a rise in fraud claims.

The legislation also includes a $150 million fund that would offer hurricane-proof improvement grants to homeowners. But that program has yet to launch, and experts say it will take years to undo the damage to Florida’s insurance market.

Meanwhile, the crisis has pushed more homeowners to Citizens Property Insurance Corp., a state-owned insurance company that sells home insurance to those who can’t get coverage through private insurers.

Citizens had more than 1 million active policies as of Sept. 23, before Ian was hurt, according to Michael Peltier, a Citizens spokesman. In 2019, that number was approximately 420,000. He said the company was writing 8,000 to 9,000 new policies a week, double what it was a few years ago. Citizens has $13.4 billion in reserves and predicts it will pay 225,000 Ian claims totaling $3.7 billion.

Even if they have homeowners insurance, many Floridians could still face financial ruin due to flooding. Flood damage is not usually covered by homeowners insurance, but can be expensive; Florida’s Division of Emergency Management says 1 inch of flood water can cause $25,000 in damage.

Friedlander said only 18% of Florida homeowners have flood insurance either through the federal government’s National Flood Insurance Program or through private insurance companies. In some coastal areas, more than half of homeowners have flood insurance, but inland — where floodwaters continue to rise even after a storm has passed — it’s closer to 5%.

Kelly, whose trailer in Fort Myers was flooded with 4 feet of salt water and sewage after Hurricane Ian, could have benefited from flood insurance. He thought he might not be able to get it because he didn’t have homeowners insurance, but that’s not the case — flood insurance is completely separate and can even be purchased by renters, experts say.

“I kind of let it sit when I couldn’t find someone to insure it initially,” he said. – This is a costly oversight on my part.”


Associated Press writer Steve LeBlanc in Boston contributed to this report.


For more information on Hurricane Ian, visit: https://apnews.com/hub/hurricanes