Is Florida’s Property Insurance Mess Threatening Its Hot Real Estate Market?

Florida has always been a complex market for property insurance. That’s the case for residential homeowners and commercial landlords alike. It’s evident to anyone who takes even a passing glance at the news these days that the rising risk of hurricanes, fueled by climate change, threatens states like Florida. The fallout happening in the property insurance industry in the state is creating issues for real estate owners and developers.

Already, developers in Florida must purchase builder’s risk insurance that covers damage to a building while it’s under construction. Those premiums have increased by about 30 percent in the state in the past two years. Developers also need insurance that covers owners against third parties for the project’s life. For Florida condos, liability insurance rates have quadrupled in the past two years.

These surging insurance rates, combined with rising interest rates and inflation, have made it extremely challenging for some real estate developers to be profitable throughout much of Florida, especially in Miami-Dade, Broward, and Palm Beach Counties. Some high-rise multifamily projects in South Florida have seen insurance costs exceeding eight percent of a project’s total cost. About three years ago, insurance averaged only around two percent of project costs.

Picking up the pieces

Simply put, property insurance in Florida is a mess. Some say the property insurance market there is teetering on the edge of collapse, and fixing the problem could be make-or-break for one of the nation’s hottest real estate markets. Six property and casualty companies offering Florida homeowners insurance have liquidated since

The post Is Florida’s Property Insurance Mess Threatening Its Hot Real Estate Market? appeared first on Propmodo.

You May Also Like