Don't understand insurance? What to know to keep a roof over your head (2025)

If you don’t know how “reinsurance” accounts for the largest chunk of the premium you see on your property insurance bill or wouldn’t know what “actual cash value” would be compared with “replacement value,” it’s not just you.

Some of it appears to be Greek, even to those shaping insurance policy, if you’re going on the evidence at this legislative session’s first meeting of the Senate Banking and Insurance Committee. The committee met in January to take stock of the state’s insurance landscape after two major hurricanes in the past season and an uptick in policyholders getting moved off the state-backed insurance, Citizens Property Insurance Corp.

The committee’s vice chairperson did not appear familiar with the name of what cost is driving average Florida homeowner premiums to the top of the national charts.

“What you’re representing there, in that graph … is when a person is coming out of Citizens and they’re going under reinsurance?” said state Sen. Barbara Sharief, D-Miramar.

Sharief, a freshman senator, was not available to discuss what she meant, but Michael Yaworsky, the state insurance commissioner, also at the hearing, told her that’s not exactly what the graph was showing. Reinsurance, simply put, is the insurance that the state’s insurers buy to back up their money reserves should catastrophe hit and trigger a calamitous crush of claims.

“Citizens is a company that is purchasing reinsurance,” Yaworsky said.

Still, considering that the number of residential disaster claims over the past nine years adds up to one claim for every five Florida dwellings, it stands to reason that Floridians are forced into a greater familiarity with their home insurance than most.

Legislation is on the move to give Sunshine State residents a better understanding of insurance before they talk to an insurance agent, thanks to Sen. Bryan Avila, R-Hialeah.

“The crux of this legislation is for our residents and our consumers to become more educated as to what the insurance market looks like,” Avila said.

It would be the state's second try at an interactive insurance information tool offered on the Florida Office of Insurance Regulation website.

The current one has been around since 2011, but it's not showing up at the top of your Google search. In a state of 10 million housing units, according to the latest U.S. Census figures, the CHOICES interactive insurance tool racked up 1,060 hits to its home insurance tab between October and December last year, even though repeated opinion polls rate the cost of home insurance as the issue that concerns Floridians the most and that period fell immediately after hurricanes Helene and Milton.

Those who try to guide property owners to the best option for their needs — insurance agents — uniformly remind consumers this is not like ordering something over Amazon and that simply choosing the cheapest option can be devastating in the long run.

What’s considered “standard” home insurance has a proliferating number of choices for consumers.

“Many people think that any agent can sell the exact same policy from the same insurance company,” said Brian Murphy, co-owner of The Murphy Agency, a Brightway affiliate, in Palm Beach Gardens, “However, quoting insurance is complex, with many variables involved. While premiums from the same carrier should be consistent, they often vary due to errors, intentional adjustments or differences in coverage, deductibles and exclusions.​”

Here are your insurance CliffsNotes with information from agents, research and other advocates for financially fortifying that roof over your head and its supporting structures in this state that lies vulnerable to Mother Nature’s wrath.

Why is the cost of my property insurance so damn high?

The sticker shock is real, especially for the large number of people coming to Florida from New York. Bankrate, an online insurance cost aggregator, estimates that the average $300,000 Florida home has an annual insurance premium of $5,340 compared with a house of the same value in New York, which costs $1,671 to insure annually.

And it's not just former New Yorkers feeling the pain.

“I talked to a lady today, she’s moving here from either North Carolina or South Carolina and she said, ‘You know, I expected to pay a lot less,' ” said Robert Norberg, president of Arden Insurance Associates in Lantana. “She's having to pay almost double for her smaller condo insurance policy than she had on a big home up north. And I'm saying, ‘You know, that's just the way it is in Florida.’

“You can't equate any other state’s insurance prices with Florida, especially South Florida,” he said.

Some have called it the perfect storm of factors. First, there’s the state’s vulnerability to hurricanes, given how it’s surrounded on three sides by ocean waters and often lies in the path of what’s getting blown off a part of Africa known as a hurricane nursery. Next comes the disproportionate number of Florida claims that turn into lawsuits. And the third factor is reinsurance, which insurance companies buy to shoulder the risk of catastrophic storms. That increases in price if the risks — storm payouts or litigated claims disputes, for example — seem too high.

Those reinsurance costs can account for 30% to 50% of your premium.

Reinsurance rates are looking better for Florida since the state’s insurance crisis of 2022, when legislators met in emergency session to shore up the state’s wobbling market.

Legislators enacted changes that decreased the incentive to sue over disputed insurance claims and, as a result, lawsuits have dropped precipitously. Also, rate increases have dropped substantially from years when they increased up to one-third, year over year. And it looks like the risk in other states is catching up to Florida: Nebraska currently is tops for average home premiums, according to Bankrate.

Gov. Ron DeSantis recently pointed to a January S&P Global report as a sign that the state’s insurance market is on its way to healing since insurers were going insolvent and others were rolling up their operations. The report showed that Florida in 2024 had the lowest insurance rate increase of any state: 1%.

How can I lower my premium?

Even if it's increasing at a slower rate, property insurance is not cheap.

Insurance contracts have different options for coverage, even within the same insurance company. And at the heart of choosing the right policy lies a calculus of how much risk homeowners are willing to take and how much they are willing to pay to transfer the risk to an insurance company.

Too often decisions on coverage are about price and not coverage and risk, according to Paul Handerhan, president of the Fort Lauderdale-based Federal Association for Insurance Reform, a consumer watchdog group.

“Policyholders just look at the premium, and they don't take that next step to really get the education from their agent,” Handerhan said. “They don’t stop and look, 'OK, I took the lower premium, but what does that mean for the other options that I turned down?' ”

Increasing the deductible, the amount of loss you’ll have to cover before insurance pays on a claim, is one major way people lower their costs. It’s also less expensive to insure at actual cash value (meaning what it's worth, given damage and depreciation) than it is to insure for the item's replacement (which can be a higher price than it was purchased at because of inflation). If you insure your 4-year-old computer, for example, the actual cash value would not result in enough of a payment to buy a replacement, given how items like that depreciate.

“Personal property coverage can be either actual cash value or replacement cost, and the difference is significant,” Murphy of the Brightway affiliation said. “Ensuring the replacement cost estimate on your dwelling is accurate is vital, as many homes are underinsured.”

Owners of older homes might want to consider purchasing coverage that would, in the case of a loss, upgrade the replacement home to building codes that might not have been in effect at the time it was built.

Another discount would involve giving up your right to sue if you don’t agree with your insurer’s estimate. This is a new wrinkle, however. So far, only one company offers this option. American Integrity Insurance Co. provides a discount of up to 20% on its policies if the insured agrees to go through an alternative process to resolve disputed claims.

Why does the same policy in the same neighborhood have a different premium?

Individual factors play a role in your premium. In addition to your proximity to a hazard (like if you’re in a coastal community), the age of your home and your credit history are considered.

Also up for scrutiny and potential bumps in your premium: Have you filed any insurance claims over the past five to seven years for losses that didn’t involve a hurricane?

“If you've had a claim in the last three years, that could actually impact your ability to change companies and go to a new company,” said Andy Kasten, president of Creative Financial Property & Casualty Group, based in Coral Springs. ”Some companies won't want to insure you, especially if you've ever had a water claim in the last three years.”

And that history can follow you from state to state, he said.

This insurance paperwork I’m signing is up to 100 pages long. I don’t need a sleeping elixir that badly. What should I be focusing on?

Roofing, water damage and whether the coverage extends to ancillary structures on your property are items that vary policy to policy, and you may want to eyeball exactly what you’re signing onto for these items.

Some policies, for example, limit what they’ll pay for water damage. The coverage is often limited to a $10,000 payout — usually not enough to fix the damage water does, according to Kasten, in Coral Springs.

“That’s the No. 1 thing that people should be aware of,” Kasten said.

And even full water coverage has its nuances.

More: Wind or water damage? Ian court cases show what policyholders face in challenging insurers

∙Covered: Damage that comes from a sudden pipe break, malfunctions of hot water heaters, dishwashers, washing machines or plumbing inside home.

∙Not usually covered: Slow leaks the homeowner did not notice.

And water damage that occurs during a hurricane is covered, if it enters the house through a breach the storm caused, like when a falling tree rips open a hole. If a storm surge during the hurricane caused the damage, a standard homeowner policy does not cover it — only a separate flood policy would reimburse that damage.

For roofs that are older than 10 years, state legislation passed in 2021 allows policies that don't pay for a full replacement, but the depreciated value of a roof, according to age, Kasten said.

“This is becoming more common, where the policy you buy has a roofing policy based on the age of your roof, or it will have a schedule built into the policy, where they will either state the value of the roof that they're willing to replace or maybe a percentage,” Kasten said.

Is there any insurance help out there from people I'm not paying directly?

There’s plenty more to read online. Besides numerous law office websites, the Department of Financial Services has amassed an extensive list of frequently asked questions about homeowners insurance that deal with everything from rates to policy cancellations at www.myfloridacfo.com/division/consumers/understanding-insurance/faq/home.

That department houses the official complaint line for individuals with specific issues with their insurer they might not feel comfortable airing with their insurance agent at www.myfloridacfo.com/division/consumers/needourhelp or by calling 850-413-3089.

This past hurricane season was the first that major hurricanes struck the state since changes to Florida law that largely hobbled policyholders’ ability to take their insurer to court.

Under the new rules, attorneys fees are not automatically awarded to the prevailing party and added to the settlement.

With the avenues for suing narrowed, the aftermath of this hurricane season appears to have increased the number of complaint calls to the state slightly, compared with the aftermath of Hurricane Ian in 2022. The Department of Financial Services logged 3,530 complaints in the calendar year 2024, compared with 3,220 complaints in 2022, according to a department spokesman.

In a nod to the perils of life in a peninsular state, the Florida Legislature in 1992 became one of a few with a dedicated insurance consumer advocate. The current occupant of that position, Tasha Carter, has been in that position since 2019.

She’s advocating for legislation that will bring a fresh infusion of cash to the popular home improvement program, My Safe Florida Home, increase the requirements for becoming a licensed home inspector and another that will require that a human makes decisions on claims, not artificial intelligence.

Her office also works with policyholders having disputes with their insurer. But Harold Levy, a Fort Lauderdale attorney who owns HL Law Group, says he's never seen complaints to the state producing a favorable outcome for an individual who feels they're owed.

"It would be nice if there was a more robust government response where you could feel like the government was investigating more of the global patterns of insurer conduct, especially after storms," Levy said.

Carter says, however, that individuals' details do get scrutiny in her office.

“There are several different options that they could consider to assist them with helping to resolve an issue,” she said.

And mark your calendar: After hurricane season begins June 1, you can't get a new policy unless you're buying a house or have been canceled by your existing insurer.

Anne Geggis is the insurance reporter at The Palm Beach Post, part of the USA TODAY Florida Network. You can reach her at ageggis@gannett.com. Help support our journalism. Subscribe today.