The state of Florida is bracing for Hurricane Milton’s wrath less than two weeks after Hurricane Helene battered the Gulf Coast. The back-to-back hurricanes are a devastating reminder that 1 in 3 Florida homes is susceptible to storm surge flooding from hurricanes, according to Guidewire .
As homeowners pick up the pieces of their lives, another storm rears its head, one that is set to ravage a much larger portion of the state. Because of storms like these, Florida is the most expensive state in the country for home insurance.
"We've always pitched ourselves as an affordable place to live, and from a tax perspective, it is," Chuck Nyce, a professor of risk management and insurance at Florida State University, said. "But I would argue today in Florida that this is something that people need to be aware of: insurance costs are high. "
The average annual cost of home insurance in Florida neared $11,000 in 2023. Insurify projects it will climb to $11,759 by the end of the year. That cost does not include flood insurance, which typically requires a separate policy.
"When you're talking about spending $10,000 or $15,000 a year for homeowners insurance coverage, $1,000 a month or more, that is part of your mortgage payment," Nyce said. "And that has to be a cost that's factored into the cost of living here."
While property insurance’s share of the average mortgage payment is going up nationwide, in places like Miami, that burden is twice as big.
For single-family homes that include insurance in escrow, ICE Mortgage Monitor said the national average share is around 9.4%, while the property insurance share in Miami is 19%. That is second only to New Orleans, Louisiana, at 25%.
"A lot of research is suggesting that both the risk and the rising insurance premiums are depressing home prices compared to what it would be," said Shan Ge, an assistant professor of finance at NYU Stern School of Business.
Ge has been researching insurance trends for years. Her published research shows when insurance rates go up, two things happen: homeowners buy less coverage and home values go down.
"And this drop in home values is pretty dramatic," Ge said. "Buyers are going to be willing to pay less for property compared to a world where Florida does not face climate risk, does not face all these disasters, and does not face these increasing insurance premiums."
Ge told Straight Arrow News she hopes developers will take her research into account in Florida and elsewhere.
"When they see these prices not as high as they would be in this counterfactual world, we're hoping that will slow down the development and discourage more people from moving into risky places ," Ge said.
In August 2024, the median sales price of a single-family home in Florida dropped from a year ago for the first time in at least five years, according to data from Florida Realtors. For condos, which face not only higher insurance costs but mandatory maintenance needs, August marked the second month of annual price declines.
So far, insurance premiums at a premium have not deterred the rampant migration to the Sunshine State, but it may influence who can afford to come in and who may be forced to leave.
"Insurance prices risk, and if you can't afford to live there, you shouldn't move there," Nyce said. "So it's a really difficult problem. I always tell people, 'I can't afford to live in Monaco, and I can't afford to drive a Bugatti, but I know that.' It's much more difficult to tell someone who's maybe lived somewhere for generations that you can't afford to live there anymore."
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