Florida Homeowners Taking on Insurance Risk
A wave of Florida homeowners are making a risky bet: they’re opting out of property insurance. This trend, fueled by soaring premiums and a volatile insurance market, has prompted a growing number of residents to self-insure, leaving them exposed to significant financial risks.
Longtime Melbourne resident David Schroeter Sr. is one of those taking the chance. He shared his story as a thunderstorm brought wind and rain to his neighborhood. The storm mirrored the one that destroyed his boat years ago.
Schroeter decided to forgo insurance on the home he’s owned for over 40 years. He explains, “There’s never been any damage done to it, and I said, you know, since the house has been built, there’s never been a claim. And think of all that money that’s been wasted.”
Schroeter’s experience reflects a broader trend. He canceled his last insurance policy in 2010 and has never looked. At the time the article was written, Divya Sangam, an insurance expert and spokeswoman with ValuePenguin, estimated that as many as one in five Florida homeowners may have opted to self-insure.
“Right now, 20 percent of homeowners in Florida have opted to self insure and remain uninsured,”
Without a mortgage, homeowners like Schroeter have the freedom to choose whether or not to carry insurance. Those with a mortgage are required to have it, but the rising cost is still affecting them.
Florida’s current insurance crisis is, in part, why the state is still holding the title of having the most expensive insurance premiums in the nation. According to data from Insurify, the average cost of property insurance in Florida hovers around $11,000 annually. ValuePenguin’s study found that property insurance costs have increased 72 percent in the last five years, and a 400 percent increase occurred in the last five years of homeowners who can’t retain coverage through private insurers.
With the cost of insurance skyrocketing, millions of Floridians have turned to Citizens, a state-run insurer. Citizens was created after Hurricane Andrew in 1992 to function as a last resort for homeowners. Citizens is now the largest holder of insurance policies in Florida, peaking at 1.4 million policies in the fall of 2023, mirroring damage from Hurricane Ian, a storm that drove insurance companies out of Florida.
Many insurance companies have denied more claims than any other state. As Sangam points out, this has made many feel as though insurance is not even worth the gamble.
“When you take all of this in context, you’re going to end up with a lot of homeowners thinking, ‘I’m not paying so much for insurance anymore. Nothing has ever happened to my house. I’m just going to take the risk and go uninsured until they fix the insurance problem in the state,’” Sangam said.
Mark Friedlander, with the Insurance Information Institute, said the state is working on the insurance problem. Lawmakers have passed insurance reforms to help make the market more attractive to private insurers and give consumers more protections.
“The industry is in a very strong financial position, the best in more than a decade. We expect stability to continue in 2025,” Friedlander said.
Friedlander also said that more private insurers are joining the market. Hopefully this will help keep homeowners from opting out of the rising trend.
Self-insuring is a risky venture, particularly for those with fewer financial resources. Friedlander said that repairing a home is one thing, but replacing it entirely can cost hundreds of thousands of dollars. He warns, “We have seen so many homeowners in the past few years that decided to self insure and regret it to the point where they cannot rebuild their homes and have to move. It’s a bad road to go down. In most cases, if you make that decision, you’re going to regret it for the rest of your life,”
Schroeter, who is self-employed, is taking a chance. He works as a licensed medical massage therapist. He is aware of the risks and said he is “gambling.” Schroeter still has faith and trust that he is blessed.
“Well, it’s a chance, like I said, and I’m gambling. But life is a chance, anyway. I could walk out this door and get hit by a car right in the middle of the street. Lightning could hit my house any minute. But you have to have faith and trust. And I know that I am blessed,” Schroeter said. “It’s all in God’s hands.”
