PIFF has looked into some common misconceptions about Florida’s property insurance market and prepared the following fact-based background information on what’s really going on.

Myth: My homeowner’s property insurance policy covers losses from all natural disasters, including floods.

Fact: Standard home insurance policies do not cover flood damage. Flood insurance to protect against flood-related losses can be obtained from the National Flood Insurance Program (NFIP) or certain private insurers. Find flood insurance resources via Florida’s Office of Insurance Regulation and Department of Financial Services.

Myth: You don’t need flood insurance if you are not in a flood zone.

Fact: Consumers should consider the entire State of Florida as a flood zone. Even if you live outside a designated flood zone, you are still at risk of flooding due to factors such as heavy rainfall, inadequate drainage systems or overflowing bodies of water. Buying flood insurance is the best way to recover from losses caused by flooding.

Myth: Home insurance covers all of my possessions.

Fact: While home insurance does provide coverage for personal belongings, there are usually limits and exclusions for certain types of items, such as jewelry, artwork, and other valuable items. It’s essential to review your policy’s coverage limits and consider additional coverage for high-value items.

Myth: The current market value of my home is automatically covered by my insurance.

Fact: Home insurance is generally adjusted on the replacement cost value of your home, but not necessarily its market value. When the cost of new construction rises, so does the cost to replace or repair existing homes that are damaged. This requires an increase in premium to ensure that the insurance company has adequate funds to repair or rebuild a damaged home.

Myth: Improvements to my home automatically increase my premium.

Fact: Home improvements such as strengthening windows, doors, and roofs can lower your premium. You should always inform your insurer if you’ve added improvements to your home like hurricane mitigation features or have modified your property by installing a pool or building any other structures. Such improvements may change your risk of loss and can affect your rate.

Myth: I can file a claim at any time for past damage.

Fact: In Florida, you have one year from the date of the loss to file a property insurance claim. Failing to report damage on time could result in your claim being denied. It’s crucial to familiarize yourself with your policy’s terms and report any damage as soon as possible. Learn more about the claim process in the Homeowners Claims Bill of Rights.

Myth: Insurance companies raise rates to increase profits.

Fact: Insurance companies are not permitted to arbitrarily set insurance rates. They are required to follow strict regulatory guidelines and insurance laws when setting or changing rates. These guidelines determine what rate is adequate for a given kind of risk. All rate changes require approval from the Office of Insurance Regulation, and insurers must provide notice to policyholders when implementing rate increases. Learn more about how Florida property insurance rates are made in this infographic.

Myth: Citizens Property Insurance is a good alternative to the private market.

Fact: Citizens was created by the Florida Legislature to be an insurer of last resort for homeowners who cannot obtain insurance in the private market. By design, Citizens offers more limited coverage than private insurers. And unlike private insurers, Citizens has the authority to assess (to tax) all of its customers and then all property and auto insurance customers in the state to cover any shortfall in its ability to pay claims. In other words, if Citizens can’t fully pay for losses from a storm, the citizens of Florida must pay.

Myth: High property insurance rates are mostly a Florida problem.

Fact: While Florida faces particular challenges due to its high susceptibility to hurricanes and the effects of decades of abusive litigation, higher property insurance rates are not unique to Florida. Property insurance rate increases are occurring across the nation as insurers react to market trends driven by the risk of hurricanes, wildfires, floods, tornadoes, and severe convective storms as well as inflation and increased costs to repair/replace homes.

Myth: Law changes passed by the Legislature to fix the property insurance market will have an immediate effect.

Fact: Legislative changes aimed at improving the insurance market were drafted to apply to future claims, not past claims. As a result, improvements to the market will take time to have their desired effect. But there are signs the market is improving. View the latest Market Pulse for updates on the health of the property insurance market in the wake of historic legislative reforms aimed at restoring competition and increasing consumer choice.

Myth: Property insurance rates are set behind closed doors and the public has no ability to participate in the process.

Fact: A public rate hearing is required for any property insurance rate increase of 15% or more that is based all or in part on a catastrophe model. The Office of Insurance Regulation has the authority to hold a public hearing on any rate increase and has recently been holding hearings on increases that are below 15%. Finally, the Insurance Consumer Advocate, who is charged with representing consumers in rate hearings, is a regular participant and is permitted to ask questions of the company representatives. All public rate hearings are streamed live on the Florida Channel. Learn more about how Florida property insurance rates are made in this infographic.