125,000 Floridians Lose Homeowners Insurance
State Farm Insurance, the biggest homeowner insurance carrier in the state of Florida, announced that they were canceling the homeowners insurance of around 125,000 residents because they see those homes at the greatest risk of serious damage if another big hurricane comes through those areas.
Last year, State Farm had petitioned the state to increase rates for some of its customers by 47% to help boost themselves against major losses caused by having to pay out for damages to homes caused by major hurricanes in 2004 and 2005. The amount paid out from just two specific hurricanes cost the company more than $29 billion, which they’re still trying to recover from. They’re not alone when it comes to losses, as the Office of Insurance Regulation projected that 102 of the 200 largest Florida carriers were running net underwriting losses.
State Farm stated that it was losing more than $20 million a month, which is why they’d asked for the rate increase. They ended up being allowed to raise rates 14.8% and were given permission to drop those policies that were most vulnerable. They had been considering leaving the Florida market altogether if they hadn’t been granted some kind of relief.
It’s hard to be mad at State Farm in this instance. It’s acknowledged that many homes haven’t been built as sturdily as they should have, with crooked contractors and the like, and we all know the damage that hurricanes can do to properties that are built well. It seems to show that the price of living in “paradise” can sometimes be quite high. Still, it’s another blow to the housing market in Florida, which has suffered already through high foreclosure rates and the closing of many banks due to bad loans.