Anyone in Florida looking to buy or build a home, or maintain insurance on a home they already own, are likely facing rising costs. Average annual premiums have risen to more than $4,200 a year, which is triple the national average.
Storm recovery costs have contributed to these large increases in property insurance in Florida. Experts say as we head into a new year, homeowners likely won’t get much relief soon.
Another factor, according to the Insurance Information Institute, is that rising construction materials and labor have caused home building costs to rise 45% since 2020 — three times the amount of overall inflation.
A report by Karen Clark & Company says that will not only keep home prices high but it will also keep the costs of insuring homes high.
“For the first time in the history of our company — we’ve been in business close to 20 years — we actually had to allocate funds for price increases that we’ve never had,” said Lusant Ordoñez, CEO of Zenodro Homes.
The developer says while costs have leveled out somewhat since the pandemic, they are still increasing frequently.
“We understand why costs of insurance have gone up because our replacement costs, or our construction costs have gone up significantly,” Ordoñez said. “Again a lot of people think in regards to our industry that developers are raking in the cash because they just decided to raise prices out of blue, which is not the case.”
The rising costs of property insurance have even forced Ordoñez to be choosy about what types of homes he builds.
“We’ve looked at a couple of apartment deals with some of our landholdings, and the costs are just too elevated for us to even think about it,” he said.
And Ordoñez still gets frequents updates about increasing building costs.
“I hate to say this, but I’m kind of used to this by now,” he said.
In a special session in 2022, Florida lawmakers took action to reduce litigation and reinsurance costs for insurance providers. But experts say while those actions could reduce further increases in premiums, it could be a couple of years before homeowners see that financial relief.