What is going on with HOI in FL

[Mitchell Catoe]

My wife and I are purchasing a STR in bay county. I got a great deal on the property which is why we moved forward, however I have recently been floored by HOI, the lowest quote I've gotten is 6k, is anybody having this issue. Any referrals would be helpful…….I also wonder if existing homeowners are seeing this influx across the board

[Randall Alan]

Quote from @Mitchell Catoe:

My wife and I are purchasing a STR in bay county. I got a great deal on the property which is why we moved forward, however I have recently been floored by HOI, the lowest quote I've gotten is 6k, is anybody having this issue. Any referrals would be helpful…….I also wonder if existing homeowners are seeing this influx across the board

Without knowing the value of your house the $6,000 value is out of context.  I can tell you for smaller rentals we pay $1,000 to $1,500 per year - those homes probably are worth $125-175,000.

We have medium size house in the $250-300,000 that run in the mid 2,000 per year for insurance, and up at the $700-800,000 range we pay around $5,000.   

If you aren’t  familiar with the Florida insurance situation, there’s been a huge amount of litigation from roofing companies that have forced the insurance companies to pay for new roofs. This caused the insurance companies to jack up their rates severely. Many insurance companies up and completely left the Florida market. Citizens insurance is usually the cheapest insurance company available these days, which is the insurance of last resort in Florida. Citizens will make you go to a regular insurer if their rates are within 20% of what citizens rates are - as they have taken on way too much risk.

The legislature has tried  to solve the insurance crisis a couple times, but I haven’t seen rates  start to come down at all. At this point, they’re just trying to keep the insurance companies that are still here from leaving.

Randy 

[Mitchell Catoe]

Quote from @Randall Alan:

Quote from @Mitchell Catoe:

My wife and I are purchasing a STR in bay county. I got a great deal on the property which is why we moved forward, however I have recently been floored by HOI, the lowest quote I've gotten is 6k, is anybody having this issue. Any referrals would be helpful…….I also wonder if existing homeowners are seeing this influx across the board

Without knowing the value of your house the $6,000 value is out of context.  I can tell you for smaller rentals we pay $1,000 to $1,500 per year - those homes probably are worth $125-175,000.

We have medium size house in the $250-300,000 that run in the mid 2,000 per year for insurance, and up at the $700-800,000 range we pay around $5,000.   

If you aren’t  familiar with the Florida insurance situation, there’s been a huge amount of litigation from roofing companies that have forced the insurance companies to pay for new roofs. This caused the insurance companies to jack up their rates severely. Many insurance companies up and completely left the Florida market. Citizens insurance is usually the cheapest insurance company available these days, which is the insurance of last resort in Florida. Citizens will make you go to a regular insurer if their rates are within 20% of what citizens rates are - as they have taken on way too much risk.

The legislature has tried  to solve the insurance crisis a couple times, but I haven’t seen rates  start to come down at all. At this point, they’re just trying to keep the insurance companies that are still here from leaving.

Randy 

We paid 303k for the property, that still doesn’t add up for what your saying, I’ll try to give the citizens company a call, thank you for the response 

[Randall Alan]

Quote from @Mitchell Catoe:

Quote from @Randall Alan:

Quote from @Mitchell Catoe:

My wife and I are purchasing a STR in bay county. I got a great deal on the property which is why we moved forward, however I have recently been floored by HOI, the lowest quote I've gotten is 6k, is anybody having this issue. Any referrals would be helpful…….I also wonder if existing homeowners are seeing this influx across the board

Without knowing the value of your house the $6,000 value is out of context.  I can tell you for smaller rentals we pay $1,000 to $1,500 per year - those homes probably are worth $125-175,000.

We have medium size house in the $250-300,000 that run in the mid 2,000 per year for insurance, and up at the $700-800,000 range we pay around $5,000.   

If you aren’t  familiar with the Florida insurance situation, there’s been a huge amount of litigation from roofing companies that have forced the insurance companies to pay for new roofs. This caused the insurance companies to jack up their rates severely. Many insurance companies up and completely left the Florida market. Citizens insurance is usually the cheapest insurance company available these days, which is the insurance of last resort in Florida. Citizens will make you go to a regular insurer if their rates are within 20% of what citizens rates are - as they have taken on way too much risk.

The legislature has tried  to solve the insurance crisis a couple times, but I haven’t seen rates  start to come down at all. At this point, they’re just trying to keep the insurance companies that are still here from leaving.

Randy 

We paid 303k for the property, that still doesn’t add up for what your saying, I’ll try to give the citizens company a call, thank you for the response 

@Mitchell Catoe

Be sure to have a 4 point inspection conducted and submit it to your insurance companies.  It can literally save you thousands of dollars.  It looks at the roof, plumbing, electrical and A/C of your property.  Costs under $200, but will save you WAY more year after year.  We have literally seen $2,000 reductions in our rates… but a lot will depend on how well your property is constructed. 

Randy 

[Mitchell Catoe]

Yeah I mean we have had a wind mit and the 4 point inspection and it’s still 6k

[V.G Jason]

It's the reason I haven't looked at Florida in my short list for REI. The HOI issues are widespread with people being fraudulent and insurance companies not providing liquidity in that market anymore due to the roofing scam. It'll take policy changes, that I think are taking place now. I live there personally, and remember hearing about all these issues.

With that said, everybody needs to look at their HOI. With the price to build more expensive, everyone's HOI is outdated. If your house burned, you likely wouldn't be able to build anywhere near what you have.

[Billy Daniel]

It's happening in several markets.  I've heard from other brokers that certain areas are not only seeing much higher rates, but are given fewer options as companies leave areas prone to natural disasters.  The gulf coast (hurricanes) and the West (wildfires) are getting hit particularly hard.  I heard from one LA broker that their area only has about 5 insurance companies to choose from for their properties.  

This is an unspoken risk of climate change as these events become larger and more costly.  

[V.G Jason]

Quote from @Billy Daniel:

It's happening in several markets.  I've heard from other brokers that certain areas are not only seeing much higher rates, but are given fewer options as companies leave areas prone to natural disasters.  The gulf coast (hurricanes) and the West (wildfires) are getting hit particularly hard.  I heard from one LA broker that their area only has about 5 insurance companies to choose from for their properties.  

This is an unspoken risk of climate change as these events become larger and more costly.  

 My Austin HOI skyrocketed 60% more. 

[Galen Ikonomov]

Quote from @V.G Jason:

Quote from @Billy Daniel:

It's happening in several markets.  I've heard from other brokers that certain areas are not only seeing much higher rates, but are given fewer options as companies leave areas prone to natural disasters.  The gulf coast (hurricanes) and the West (wildfires) are getting hit particularly hard.  I heard from one LA broker that their area only has about 5 insurance companies to choose from for their properties.  

This is an unspoken risk of climate change as these events become larger and more costly.  

 My Austin HOI skyrocketed 60% more. 

 Your property taxes are also up that much lol. 

[V.G Jason]

Quote from @Galen Ikonomov:

Quote from @V.G Jason:

Quote from @Billy Daniel:

It's happening in several markets.  I've heard from other brokers that certain areas are not only seeing much higher rates, but are given fewer options as companies leave areas prone to natural disasters.  The gulf coast (hurricanes) and the West (wildfires) are getting hit particularly hard.  I heard from one LA broker that their area only has about 5 insurance companies to choose from for their properties.  

This is an unspoken risk of climate change as these events become larger and more costly.  

 My Austin HOI skyrocketed 60% more. 

 Your property taxes are also up that much lol. 

Fortunately, they are not. 

[Russell Brazil]

Is it in a flood zone?

[Jared Townsend]

Quote from @Randall Alan:

If you aren’t  familiar with the Florida insurance situation, there’s been a huge amount of litigation from roofing companies that have forced the insurance companies to pay for new roofs. This caused the insurance companies to jack up their rates severely. Many insurance companies up and completely left the Florida market. Citizens insurance is usually the cheapest insurance company available these days, which is the insurance of last resort in Florida. Citizens will make you go to a regular insurer if their rates are within 20% of what citizens rates are - as they have taken on way too much risk.

@Mitchell Catoe A quick heads up that Citizens does not allow for short term rental use. There are other markets out there, but for a coastal property $6,000 may be the best there is. In the next 12-18 months we should see new carriers to the market and old markets open back up more. This will allow for more competition and push rates back down - so you may only have that astronomical cost for a few years. 

[January Johnson]

Quote from @Mitchell Catoe:

My wife and I are purchasing a STR in bay county. I got a great deal on the property which is why we moved forward, however I have recently been floored by HOI, the lowest quote I've gotten is 6k, is anybody having this issue. Any referrals would be helpful…….I also wonder if existing homeowners are seeing this influx across the board

I'm so sorry that your agent didn't warn you! This is one of the FIRST things I let my investor clients know. One thing that can help GREATLY with the cost of insurance is by purchasing a newer property. I sold a 5/3, built in 2018, to be used as an STR, and the insurance was $3,500. If you are buying an older property, your cost will definitely be more.

[January Johnson]

Quote from @Russell Brazil:

Is it in a flood zone?

 Flood insurance is a separate policy and most are assumable by new buyers at the current rate.  

[January Johnson]

Quote from @Randall Alan:

Quote from @Mitchell Catoe:

My wife and I are purchasing a STR in bay county. I got a great deal on the property which is why we moved forward, however I have recently been floored by HOI, the lowest quote I've gotten is 6k, is anybody having this issue. Any referrals would be helpful…….I also wonder if existing homeowners are seeing this influx across the board

Without knowing the value of your house the $6,000 value is out of context.  I can tell you for smaller rentals we pay $1,000 to $1,500 per year - those homes probably are worth $125-175,000.

We have medium size house in the $250-300,000 that run in the mid 2,000 per year for insurance, and up at the $700-800,000 range we pay around $5,000.   

If you aren’t  familiar with the Florida insurance situation, there’s been a huge amount of litigation from roofing companies that have forced the insurance companies to pay for new roofs. This caused the insurance companies to jack up their rates severely. Many insurance companies up and completely left the Florida market. Citizens insurance is usually the cheapest insurance company available these days, which is the insurance of last resort in Florida. Citizens will make you go to a regular insurer if their rates are within 20% of what citizens rates are - as they have taken on way too much risk.

The legislature has tried  to solve the insurance crisis a couple times, but I haven’t seen rates  start to come down at all. At this point, they’re just trying to keep the insurance companies that are still here from leaving.

Randy 

Additionally, over 75% of all claims recently have been "attorney-attached", which meant insurers paid out WAY MORE than they would have normally.  This is also driving rates up.

[Mitchell Catoe]

If anyone has a contact that would be awesome