Why Suze Orman Doesn’t Insure Her Florida Condo — Should You Follow Her Example?

Climate change is causing homeowners insurance premiums to skyrocket, destroying the American dream of homeownership , according to finance expert Suze Orman. The 72-year-old was recently quoted $28,000 for the year by her insurer to cover her 2,100-square-foot condo in Florida.

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Her solution? Self-insurance.

Money mistakes the super wealthy never make - that you might be doing now.

Insurance Rates Continue To Climb

According to Insurify’s 2024 Insuring the American Homeowner report , the average annual rate increased by 19.4% between 2021 and 2023, from $1,984 to $2,377. The insurance comparison website also predicts a 6% increase in 2024 to $2,522 by the end of the year.

Homeowners in Vermont pay the least, with an average annual rate of $918, while Florida home insurance rates will rise to $11,759 by the end of 2024.

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Severe Weather Partially To Blame

Severe weather — specifically hurricanes, tornadoes and wildfires — have had a big impact on rising rates, but the report also blamed inflation and rising homebuilding costs. Last year, the U.S. experienced 28 weather and climate disasters totaling $1 billion or more, each. That’s the highest number of billion-dollar disasters in a calendar year, according to the National Oceanic and Atmospheric Administration .

Orman said Americans will soon have little interest in owning homes as insurance rates continue to climb. “Climate change is going to make a big difference in people’s desire to own their own home,” Orman told The Daily Mail .

“‘Real estate is unpredictable. I never would have thought to advise homebuyers ‘Oh you better make sure that you can afford a quadrupling of property insurance in the future.'”

While Orman can opt to self-insure, not every U.S. homeowner has that opportunity. It’s not legally required, but most mortgage lenders require borrowers to purchase home insurance when applying for a loan to protect their investment in the property.

“I’m not paying $28,000 a year when the insurer will probably contest any claim I get anyway. Luckily, I have the money to self-insure,” Orman said. “$28,000 for a 2,100-square-foot condo. Are you kidding me?”

How Can You Lower Home Insurance Costs?

There are several methods to help lower home insurance costs. According to the Insurance Information Institute (III) , you can shop around to find the best rate, bundle your home and auto policies and improve your credit score. Another option is to raise your deductible, but The Daily Mail pointed out that there are risks to this method.

The higher your deductible, the lower your premium — but this also means you’ll pay more out of pocket if you file a claim. Raising your deductible to $1,000 can save you as much as 25%, III reported. However, if there’s a major loss, you may not be able to afford to pay it, and depending on where you live, your insurer may require a separate deductible for certain kinds of damage.

This article originally appeared on GOBankingRates.com : Why Suze Orman Doesn’t Insure Her Florida Condo — Should You Follow Her Example?