Farmers Insurance Will No Longer Insure Florida Homeowners, Drivers

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A major insurer is pulling out of the Florida market. Read on to see why that’s bad news for Florida residents. 

What happened

Farmers Insurance will stop offering insurance coverage in Florida, which will affect about 100,000 customers in the Sunshine State.

So what

Florida is known as an extreme weather hotspot in the U.S., with an elevated frequency of hurricanes and other high-risk weather. As such, insurers in the state take on a higher probability of having to pay out on policies, and Farmers is taking this step to manage their exposure to risk.

Farmers Insurance says that its decision to stop offering homeowners and other insurance products is necessary to manage its exposure to risk. This change, however, won’t affect Florida customers covered by a Farmers-owned subsidiary.

“Such policies will continue to be available to serve the insurance needs of Floridians,” Farmers Insurance spokesperson Trevor Chapman said in a statement, according to CNN. “Affected customers will receive notifications detailing when their coverage will end and will be advised of options for replacement coverage.”

Now what

Over the past 18 months, 15 homeowners insurance companies have put a hold on writing new policies in Florida, while four carriers have announced plans to leave the market. Meanwhile, seven insurance companies serving Florida have been declared insolvent.

The departure of Farmers Insurance only makes it more difficult for Florida residents to get the coverage they need. Even though Farmers only insures about 2% of Florida residents, as choices for coverage get whittled down, homeowners will likely be looking at higher premium rates that they’ll have to settle for due to a lack of options.

Of course, Florida isn’t the only state Farmers is taking a more cautious approach to. It recently announced plans to limit new homeowners insurance policies in California due to wildfire risks.

All told, Florida residents may need to brace for higher insurance costs across the board. But it may be possible to mitigate some of those costs — and storm-related damage — by securing homes against hurricanes and major weather events. Storm doors and shutters, for example, can go a long way toward preventing wind damage, and installing them could lead to lower insurance rates.

Florida homeowners whose insurance coverage isn’t renewed are required to get 120 days of notice from their insurers, so in the coming weeks, many people will likely hear from Farmers along these lines. Those in that situation should begin shopping around for new insurance as quickly as possible to ensure that they don’t face a gap in coverage. That could be financially catastrophic in the event of property damage, whether from a storm or otherwise.

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