The high number of Florida homeowners who have forgone insurance amid skyrocketing prices is raising concerns among experts over what might happen should this year's hurricane season be a devastating one for the state.
"Forecasters predicted that this will be an especially strong hurricane season and record-breaking Beryl suggests that they're right," Benjamin Collier, a risk management and insurance professor at the Fox School of Business at Temple University, told Newsweek. "The season is just getting started, and that's creating a lot of concern for places like Florida."
While an explosion of damage claims could be tricky for anyone in the state, likely leading to further premium increases in the near future, for those homeowners who have decided to save money and ditch property insurance, it could be nothing short of disastrous.
More From Newsweek Vault: How Much Is My House Worth? How to Determine Your Home's Value
According to 2023 data from the Insurance Information Institute (Triple-I), between 15 and 20 percent of Florida homeowners had no property insurance as of last summer. That's about one in five homeowners going bare in the hurricane-prone state after premiums have doubled and even tripled in the past few years.
More From Newsweek Vault: How to Increase Your Home's Value
"This is the highest percentage in the U.S.," Mark Friedlander, director of Triple-I, told Newsweek. "According to a 2023 consumer survey conducted by Triple-I and Munich Re, 12 percent of U.S. homeowners voluntarily don't carry property insurance."
A recent report by the Consumer Federation of America released in May and using 2018-2022 data found that 10 percent of Florida homeowners are uninsured—higher than the national average of 7.4 percent. At the national level, homeowners living in the metropolitan areas of Miami were most likely not to have property insurance, the report read.
The Sunshine State is facing a crisis in its property insurance sector brought about by excessive litigation, widespread fraud and the increased risk of more frequent and more severe extreme weather events, fueled by global warming. These factors—together with the withdrawal of several private insurers from the state or their decision to cut coverage in vulnerable areas—have led to massive rate hikes in the past few years in Florida.
"I am very concerned about uninsured homeowners in Florida," Collier said. "Repairs from a severe hurricane can cost hundreds of thousands of dollars. Few households can fund those repairs without insurance."
As Collier says, a terrible hurricane season could be very pricey for homeowners who have ditched insurance. Between 2020 and 2023, a series of 16 severe storms and hurricanes caused between $100 billion and $200 billion in damages in the Sunshine State. Hurricane Ian alone caused over $112 billion in damage, according to the National Hurricane Center.
"Some uninsured homeowners may expect to receive government disaster assistance, but government assistance is less generous than many people believe," Collier said.
"Government disaster assistance can come in the form of a grant or a low-interest loan. These grants are typically small, less than $10,000 on average," he added. "Many homeowners who apply for a government disaster loan are declined because they do not have the ability to repay a large new loan on top of their existing commitments."
Friedlander said: "The purpose of insurance is financial protection. Homeowners without property insurance are vulnerable to a substantial financial loss that they would need to pay out of pocket.
"It is not a realistic scenario for most Americans to assume they could cover the costs of rebuilding their home after a catastrophe without insurance. And a FEMA emergency grant, which typically averages under $10,000 per household, is not a replacement for insurance coverage."
