A new topic today, and this will be a series with at least one more segment...
Homeowners' insurance premiums have been drastically increasing in Florida, and many insurance companies have been going bankrupt or pulling out of Florida, partially or entirely. The situation has worsened over the past few years, but especially within the past year. The legislature of Florida, controlled by Republicans, was too busy with culture wars and marginalization of minorities to act until last week's special session, where 2 reform bills were passed on a bipartisan basis.
This is an important issue to Florida's future and to affordability of housing. But first, let's take a step back to consider the purpose of insurance. I specialized in studying financial education and financial literacy of preservice teachers for my PhD dissertation, because I find personal finance such a fascinating topic. One important element of financial literacy is understanding and purchasing appropriate insurance. If there is a loss that would be financially devastating for you, and insurance is available for it at a reasonable cost, it probably makes sense to purchase it. On the other hand, insurance plans such as extended car warranties, whole life insurance policies, and warranty plans on electronics offered at electronics stores are not a good option.
Good forms of personal insurance include health insurance, auto insurance, homeowners' or renters' insurance and flood insurance, liability umbrella insurance, term life insurance, some forms of disability insurance, and single premium immediate annuities. There is a large variety of companies and options for most of these, and policy fine print and premiums vary widely between companies and depending on availability of employer or government subsidies or group plans, personal circumstances, and what perils you are insuring against. Thus, taking the time to learn and to consult with experts is important.
Some forms of insurance are required by law, and others are required by lender policy. For instance, auto insurance is required in Florida (although somewhere around 20% of motorists don't have it!), but the policy limits and types of insurance required by law are much LESS than what anyone should carry to be reasonably protected. Comprehensive and collision coverage, which pay for damage to your car, are not required by law—but your lender will require them if you have an auto loan, to protect themselves from risk of loss. Unfortunately, like with homeowners' insurance, Florida has among the highest auto insurance rates in the United States, due to a high level of risk to insurance companies.
Homeowners' insurance is not required by law, but it is vital to protecting yourself in the event of catastrophes such as hurricanes, fires, falling trees, personal injury lawsuits, et cetera. In many parts of Florida, flood insurance is also quite important and can cost quite a bit more (most homeowners' insurance policies do not include it). In addition, if you have a mortgage, your lender requires you to carry homeowners' insurance, mainly as a way to protect themselves, but this also protects you as you would be on the hook for both the repairs or replacement of your home and the mortgage if you did not have it.
I am going to continue this in a 2nd part later this week. I will write about risk pooling, moral hazard, litigation reform, and the impacts of the climate crisis and predatory over-development in the next part.
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Notes:
New Florida legislation on homeowners' insurance passed last week:
https://www.myfloridahouse.gov/Sections/Bills/billsdetail.aspx?BillId=76727
https://www.myfloridahouse.gov/Sections/Bills/billsdetail.aspx?BillId=76728
On the homeowners' insurance crisis in Florida:
https://www.nbcmiami.com/news/local/thousands-of-floridians-arent-insuring-their-homes/3549/
https://www.wesh.com/article/florida-homeowners-property-insurance/39985276
https://www.bankrate.com/insurance/homeowners-insurance/florida-homeowners-insurance-crisis/
General information on homeowners' insurance:
https://www.flindependentagents.com/r/a/is-home-insurance-required/
Florida also has sky-high auto insurance rates:
I will talk more about climate change in part 2:
When you write, "The legislature of Florida, controlled by Republicans, was too busy with culture wars and marginalization of minorities to act until last week's special session, where 2 reform bills were passed on a bipartisan basis." Is this a factual statement or an opinion? Additionally, why did the administration before, not do something? For the record, people don't care about your opinion!