Farmers Insurance: Navigating Florida's Unique Insurance Landscape

Farmers Insurance is withdrawing from the Florida insurance market, impacting around 100,000 customers with auto, home, and umbrella policies. The decision, announced in July 2023, is due to the high level of insurance risk in the state, particularly regarding hurricanes and extreme weather. However, Farmers Insurance subsidiaries such as Foremost Signature and Bristol West will continue to serve Floridians, and the company will assist affected customers in finding replacement coverage options.

Farmers Insurance is withdrawing from Florida

The move by Farmers Insurance comes amid a property insurance crisis in Florida, with the state facing challenges such as rising insurance costs, frequent natural disasters, and a high number of lawsuits. Florida's location and low elevation make it particularly vulnerable to hurricane damage, and the state has experienced some of the most expensive storms in recent years, including Hurricane Ian in 2022.

The withdrawal of Farmers Insurance from Florida will leave residents with even fewer options and higher costs for insurance. Florida Insurance Consumer Advocate Tasha Carter expressed concern over the decision, stating that it directly impacts Farmers' policyholders who will now have to find new insurance in a market with limited availability and affordability. The state's insurance market is facing increasing premiums, with Floridians paying about $6,000 for their yearly home insurance premium on average, a 42% increase from the previous year.

Farmers Insurance has stated that the decision to withdraw from Florida was necessary to effectively manage its risk exposure. The company has committed to providing notifications to affected customers, detailing when their coverage will end and advising them of options for replacement coverage. The transition is expected to take place over the next year and a half, with renewals being issued for policies with renewal dates in 2023 and early 2024.

The state of Florida and its lawmakers have been attempting to address the insurance crisis through various measures, including cracking down on bad contractors, limiting policyholders' ability to sue insurance companies, and establishing a $2 billion reinsurance fund. However, these efforts have not prevented the exodus of insurance companies from the state, and Florida continues to grapple with the challenges of high insurance costs and limited options for its residents.

Home insurance in Florida

Florida has always been a relatively risky state from an insurance perspective. Its long coastline and subtropical climate make it susceptible to tropical storms and hurricanes, causing Florida to historically have some of the highest home insurance rates in the nation.

However, recent events have exacerbated the situation, creating an insurance crisis. Extreme weather has increased the severity and frequency of storms. Combined with the rising cost of building materials due to inflation, reinsurance companies have increased the rates they charge home insurance providers to reduce their financial risk and remain profitable.

In addition, Florida faces more cases of fraud than other states, especially for roof replacement. Insurers in Florida also face more lawsuits than in any other state, and the cost of all this litigation trickles down to consumers.

Home Insurance Options in Florida

Despite the challenges, residents of Florida still have options when it comes to getting homeowners insurance. Some of the best home insurance companies in Florida include:

• State Farm: State Farm is America's largest insurer and stands out for its long list of coverage options. Its policies generally include extra dwelling coverage in case it costs more than expected to rebuild your home after a covered disaster.
• Chubb: Chubb serves mostly affluent policyholders with high-value homes, offering lofty coverage limits and lots of perks. For example, the company covers water damage from backed-up sewers and drains, and pays to bring your home up to the latest building codes during reconstruction after a claim.
• Nationwide: Nationwide offers a variety of ways to customize your policy. For example, you can add coverage for things like identity theft, high-value items, and backed-up sewers and drains.
• Tower Hill: Tower Hill offers the cheapest homeowners insurance rates in Florida, with an average annual premium of $1,242. They also offer multiple types of flood coverage, as well as special coverages for higher-value homes.
• Florida Peninsula: Florida Peninsula offers unique benefits and expertise in insuring coastal homes. They offer private flood insurance with up to $2 million in coverage for your home.
• Citizens: Citizens is a government entity and the state's "insurer of last resort". It provides insurance for eligible homeowners who can't get coverage on the private market.

Home Insurance Requirements in Florida

Homeowners insurance isn't required by law in Florida. However, if you have a mortgage, your lender will likely require you to buy a policy. Additionally, if you have a home insurance policy from Citizens, you'll be required to buy flood insurance.

Car insurance in Florida

Florida is a no-fault state, meaning that your insurance covers some or all of your medical expenses after a car accident, even if the accident was caused by another driver. No-fault insurance also restricts the right to sue to lawsuits that involve severe injuries. Severe injuries include significant disfigurement or scarring, permanent limitation of a body organ or member, and significant limitation of a body function or system.

The average cost of car insurance in Florida is $1,458 per year for full coverage, which includes liability, collision, and comprehensive insurance. This is higher than the national average of $1,176. However, insurance premiums vary depending on factors such as the amount of coverage, driving history, the car you drive, and other variables.

Florida is known for its beautiful weather, vacation destinations, and theme parks. It is the third most populous state in the country and is home to multiple cities with over a million people, including Miami, Orlando, Jacksonville, and Tampa. The state is bordered by the Atlantic Ocean, the Caribbean Sea, and the Gulf of Mexico, making it susceptible to hurricane damage. As a result, insurance companies consider Florida a high-risk state, and some companies have decided to withdraw from the market, including Farmers Insurance.

When choosing car insurance in Florida, it is important to consider the coverage limits, your driving history, and any discounts you may be eligible for. It is also recommended to increase your coverage limits beyond the state minimums for greater protection.

The impact of Farmers Insurance's withdrawal

Farmers Insurance's withdrawal from Florida will have a significant impact on both the company's customers and the state's insurance market. The decision will affect around 100,000 policies, including auto, home, and umbrella policies, forcing thousands of people to find new insurance providers. This move comes amid a property insurance crisis in Florida, with rising insurance costs and an increasing number of insurers withdrawing from the state.

Farmers Insurance's decision to withdraw is a result of the high level of insurance risk posed by Florida and its susceptibility to hurricanes and other extreme weather events. The state's location and low elevation make it particularly vulnerable to hurricane damage, and the frequent storms have led to increased claims and financial strain on insurance companies. In addition to extreme weather, Florida's legal system has also been criticised for promoting litigation abuse and excess claims, further contributing to the industry's challenges.

The withdrawal will likely lead to increased insurance rates and a greater reliance on the state-run Citizens Property Insurance Corporation. This could result in a ripple effect, impacting other insurance companies and potentially driving more regional insurers out of business. Florida's Insurance Consumer Advocate, Tasha Carter, expressed concern over the availability, affordability, and reliability of homeowners insurance in the state. The decision by Farmers Insurance has renewed anxiety and highlighted the challenges of insuring properties in Florida.

Farmers Insurance's departure will also impact the company's business and reputation. While the company has stated that the decision was necessary to manage its risk exposure, it has faced backlash from Florida officials, including Chief Financial Officer Jimmy Patronis, who has threatened to hold the company accountable and explore possible investigations. The company's small market share in Florida, estimated at barely 2%, may somewhat limit the overall impact on its business.

Overall, the withdrawal of Farmers Insurance from Florida will have significant consequences for both the company and its customers, contributing to the ongoing challenges and uncertainty in the state's insurance market.

Other insurance companies in Florida

Farmers Insurance is withdrawing from the Florida insurance market, but it's not the only insurance company operating in the state. Here are some other insurance companies in Florida:

• State Farm: State Farm is the best homeowners insurance company in Florida, according to US News. It offers comprehensive coverage options and discount opportunities. State Farm also has a strong network of local agents.
• Chubb: Chubb is a global insurance company with an A++ financial rating from AM Best. It offers standard protections in its homeowners insurance policies, along with risk consulting, extended replacement cost, and complimentary property management services for homeowners with a second or seasonal home in hurricane-prone regions.
• Allstate: Allstate offers coverage for primary dwellings and other structures on your property. It also provides coverage for personal property and offers optional flood and earthquake insurance. Allstate has numerous discount options, including multi-policy, loyalty, and protective device discounts.
• Progressive: Progressive is the third-largest insurer in the US and offers property, auto, and personal insurance. It allows customers to bundle multiple types of coverage for a discounted rate. Progressive has a robust array of discounts, including discounts for using contractors within its network.
• Travelers: Travelers offers a broad range of coverage options and discounts. It is one of the largest insurance providers in the nation.
• Frontline Insurance: Frontline Insurance is a group of independent insurance companies serving coastal homeowners in the Southeast US, including Florida.
• Southern Oak Insurance Company: This is a Florida-based insurance company specialising in personal residential property coverage. It is owned and operated by Florida residents.
• The General Insurance: This is a licensed car insurance agency based in Nashville, Tennessee, offering insurance to high-risk drivers.
• People's Trust Insurance Company: This insurance company offers a unique approach to delivering home insurance protection in Florida, with an emphasis on preparedness and rapid response.
• Liberty Mutual: Liberty Mutual offers homeowners, renters, auto, pet, and tuition insurance. Its standard homeowners insurance policies include dwelling, personal property, and personal liability coverage. Liberty Mutual offers flood insurance through the National Flood Insurance Program and has a financial security grade of A from AM Best.
• Geico: Geico has a highly-rated mobile app and a full-service website, allowing policyholders to make changes and file claims easily. It offers some of the cheapest average premiums in Florida for minimum coverage policies and has plenty of discount opportunities.
• Auto-Owners Insurance: Auto-Owners offers a wide variety of products with the opportunity to bundle. It has fewer complaints than other companies for auto and life insurance.

Frequently asked questions