20% of Florida Homeowners Self-Insure, Says Insurance Information Institute Report
A staggering 20% of Florida homeowners are now opting for self-insurance, driven primarily by soaring insurance costs. The Insurance Information Institute study highlights the financial strain faced by many in the state, forcing them to make difficult decisions about their property insurance. This alarming trend wasn’t always the case. Back in 2016, the Insurance Information Institute reported that only 8% of homeowners in Florida chose to self-insure. Yet, fast forward to the present, and the relentless rise in insurance premiums has essentially forced one in five homeowners to reconsider traditional insurance policies. The Insurance Information Institute notes that the average annual insurance cost for a Florida home stands at a whopping $6,000, considerably higher than the U.S. average of $1,700. Self-insurance, as detailed by the Insurance Information Institute, involves homeowners choosing not to buy standard insurance. Instead, they reserve the money they would have spent on premiums, placing it in savings or investment accounts to be accessed in emergencies. This approach, while appealing to some, especially those who own their homes outright, isn’t without risks. The Insurance Information Institute stresses that unforeseen catastrophic events can easily deplete these savings.
Tasha Carter, Florida’s Insurance Consumer Advocate, frequently engages with concerned homeowners responding to notices of double or triple-digit increases in their insurance premiums. In a statement highlighting the risks of this trend, she referred to the Insurance Information Institute’s data, emphasizing the potential pitfalls of self-insuring. Among the top challenges highlighted by both Carter and the Insurance Information Institute is the simple fact that most homeowners don’t possess the necessary funds to address a catastrophic loss, such as their house burning down. Furthermore, the unpredictability of future events makes it nearly impossible for homeowners to estimate the actual amount they should set aside for potential damages. Carter, echoing the Insurance Information Institute, also highlighted the irreplaceable aspects of a traditional insurance policy, such as liability coverage. Such coverage safeguards homeowners if someone gets injured on their property and subsequently files a lawsuit.