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Key takeaways:
But what’s really behind the surge in rates? Well, it’s a mix of things. First, the cost of rebuilding after a storm has increased, with construction materials and labor getting more expensive. Then there’s the fact that insurers are paying more for reinsurance (basically insurance for themselves), which they pass on to us. And, of course, living in a state constantly in the path of hurricanes means premiums are naturally higher to cover potential damage.
So, what does that mean for you as a homebuyer?
Let's dig into what’s happening with hazard insurance in South Florida—and how you can make smart choices to keep your costs in check when buying a home.
If a natural disaster strikes, the hazard insurance portion of your homeowner's insurance will kick in. You can usually file a claim for damage from:
The Atlantic hurricane season can wreak havoc on the southeast coastline, with several hurricanes making landfall in a single season. Even if your home isn’t affected, your insurance company might raise their rates after a particularly bad season.
We should also mention wildfires. While they’re not a concern in urban areas, Florida experiences more than 4,000 wildfires a year on average, and this number could go up. Damage caused by hurricanes is creating drought conditions in the Everglades. The 2025 wildfire season could be particularly bad.
Four years have passed since the Surfside condo collapse, a tragic event that raised concerns about aging condo buildings. Insurers have responded by increasing insurance rates for this type of dwelling.
Fixing or rebuilding a damaged home costs more than ever, driving the average claim up. Compared to pre-COVID, most construction materials cost 40% more, and tariffs could worsen things.
For home buyers, this might mean buying separate coverage. Under Florida law, sellers have to let you know if flood damage happened in the past. It’s also a good idea to pay for a flood risk determination.
You can then decide whether to buy additional insurance through a private insurer or the National Flood Insurance Program.
Even though it’s an additional expense, it’s a must-have investment if your property is in a high-risk area.
Even though it’s not a legal requirement, you should still carry insurance:
At closing, you’ll have to put enough money in an escrow account to buy coverage for six months to a year. It’s something you’ll have to budget for!
High insurance rates also impact what kind of dwellings people look at. Older condos and coastal properties can cost more to insure, making other options more appealing.
PFCU mortgage expert Nathan O’Gorman recommends “reaching out to insurers and getting quotes before you put an offer on a home. That way, you’ll know exactly how much you want to spend on insurance at closing and beyond.”
The key is to create a balanced budget, account for high insurance rates, and look for ways to save in other areas.
Power Financial Credit Union can help with competitive mortgage rates. First-time buyers can qualify for mortgages with no down payment and PMI.
Explore our mortgage products or contact us with any questions about getting ready for homeownership!
What is hazard insurance?
Hazard insurance is part of your homeowner’s insurance policy covering damage from extreme weather events or vandalism.
Do I need hazard insurance?
Your home is an investment, and hazard insurance will protect it from damage.
Do you legally have to buy hazard insurance in Florida?
There are no Florida laws requiring you to carry hazard insurance. However, most mortgage lenders will ask you to buy coverage.
What does homeowner's insurance cover?
Homeowner’s insurance covers your home and potential damage to its structure and your personal belongings.
Why does home insurance cost more in South Florida?
Property insurance rates are up due to damage from hurricanes and other natural events. Plus, high construction costs are driving home replacement values up.
Key takeaways:
- Florida has the highest homeowner's insurance rates in the country.
- This is due to insurers charging more for hazard insurance. Hurricanes, wildfires, and other risks.
- Even though no law requires you to carry hazard insurance, skipping it is not a good financial move.
- Prospective buyers must budget for higher insurance rates and look for ways to save in other areas.
But what’s really behind the surge in rates? Well, it’s a mix of things. First, the cost of rebuilding after a storm has increased, with construction materials and labor getting more expensive. Then there’s the fact that insurers are paying more for reinsurance (basically insurance for themselves), which they pass on to us. And, of course, living in a state constantly in the path of hurricanes means premiums are naturally higher to cover potential damage.
So, what does that mean for you as a homebuyer?
Let's dig into what’s happening with hazard insurance in South Florida—and how you can make smart choices to keep your costs in check when buying a home.
What Is Hazard Insurance?
General insurance policies cover your home and your personal belongings in case of structural damage. But what if a wildfire damages your home or a hurricane from the Atlantic makes landfall?If a natural disaster strikes, the hazard insurance portion of your homeowner's insurance will kick in. You can usually file a claim for damage from:
- High wind
- Falling objects
- Hailstorms
- Wildfires
- Vandalism
Why Is Hazard Insurance Up?
PFCU mortgage expert Nathan O’Gorman is tracking this trend closely: “Hazard insurance is way up, which often surprises first-time buyers. Between claims from hurricanes, concerns following the Surfside condo collapse, and rising construction costs, insurers keep charging more for hazard coverage. This trend is here to stay, and South Florida homeowners must budget for it.”The Atlantic hurricane season can wreak havoc on the southeast coastline, with several hurricanes making landfall in a single season. Even if your home isn’t affected, your insurance company might raise their rates after a particularly bad season.
We should also mention wildfires. While they’re not a concern in urban areas, Florida experiences more than 4,000 wildfires a year on average, and this number could go up. Damage caused by hurricanes is creating drought conditions in the Everglades. The 2025 wildfire season could be particularly bad.
Four years have passed since the Surfside condo collapse, a tragic event that raised concerns about aging condo buildings. Insurers have responded by increasing insurance rates for this type of dwelling.
Fixing or rebuilding a damaged home costs more than ever, driving the average claim up. Compared to pre-COVID, most construction materials cost 40% more, and tariffs could worsen things.
What Does Hazard Insurance Not Cover?
Hazard insurance covers damage from high winds during a hurricane – but not from flooding.For home buyers, this might mean buying separate coverage. Under Florida law, sellers have to let you know if flood damage happened in the past. It’s also a good idea to pay for a flood risk determination.
You can then decide whether to buy additional insurance through a private insurer or the National Flood Insurance Program.
Even though it’s an additional expense, it’s a must-have investment if your property is in a high-risk area.
What Does Florida Law Say About Hazard Insurance?
Hazard insurance – or home insurance, for that matter – isn't a legal requirement in Florida. There are no mandates on how much coverage you should carry, and you’re free to forego insuring your home if you wish to. In fact, it's what 15 to 20% of Florida homeowners do!Even though it’s not a legal requirement, you should still carry insurance:
- Fixing or rebuilding a damaged home could quickly exceed your budget.
- Lenders have their own requirements. You can’t get a mortgage if you don’t carry homeowner's insurance.
How Is Hazard Insurance Impacting Home Ownership in South Florida?
With the hazard portion of homeowner’s coverage going up, Florida now has some of the highest insurance rates in the country. Insuring your dwelling for $200,000 on average costs more than $3,700 a year.At closing, you’ll have to put enough money in an escrow account to buy coverage for six months to a year. It’s something you’ll have to budget for!
High insurance rates also impact what kind of dwellings people look at. Older condos and coastal properties can cost more to insure, making other options more appealing.
PFCU mortgage expert Nathan O’Gorman recommends “reaching out to insurers and getting quotes before you put an offer on a home. That way, you’ll know exactly how much you want to spend on insurance at closing and beyond.”
Plan for Homeownership with Power Financial Credit Union
High insurance costs are a reality for South Florida buyers, but they shouldn’t keep you from buying your dream home.The key is to create a balanced budget, account for high insurance rates, and look for ways to save in other areas.
Power Financial Credit Union can help with competitive mortgage rates. First-time buyers can qualify for mortgages with no down payment and PMI.
Explore our mortgage products or contact us with any questions about getting ready for homeownership!
FAQs
What is hazard insurance? Hazard insurance is part of your homeowner’s insurance policy covering damage from extreme weather events or vandalism.
Do I need hazard insurance?
Your home is an investment, and hazard insurance will protect it from damage.
Do you legally have to buy hazard insurance in Florida?
There are no Florida laws requiring you to carry hazard insurance. However, most mortgage lenders will ask you to buy coverage.
What does homeowner's insurance cover?
Homeowner’s insurance covers your home and potential damage to its structure and your personal belongings.
Why does home insurance cost more in South Florida?
Property insurance rates are up due to damage from hurricanes and other natural events. Plus, high construction costs are driving home replacement values up.