It is an understatement to say this is an interesting time to be a homeowner in Florida. The homeowners insurance crisis that has been years developing is still in full bloom as the calendar keeps flipping forward toward another hurricane season.

FLORIDA HOMEOWNERS INSURANCE CRISIS

National insurance companies and even some Florida-based ones are continuing to be selective in their policy decisions, meaning homeowners in higher-risk hurricane areas of the state are seeing their policies canceled. And those who still have insurance too often are recognizing that premiums are unsustainably high.

There are several reasons for the crisis. The most obvious one is that Florida is vulnerable to hurricanes. Much of the state is a narrow, long strip of land that gives hurricanes a broad target when they blow in. This is made worse by the state’s chief geographical feature: It lies low against the water that laps its shores on two sides. There are no mountain ranges to deflect Gulf or Atlantic wind or to build on above flood levels. The state is a victim of its geography.

The impact on insurance companies is only slightly less than on homes situated on this hurricane-prone land. They are regulated entities that must charge higher prices for property policies that are very likely to have claims brought against them. This likelihood feeds the premiums that homeowners are anguished about. It also has led to insurance companies pulling up and leaving the state altogether, reducing choices and competitive pressures.

One of the consequences of the reduced field of insurance companies is that the insurer of last resort has become a first resort for many. Citizens Property Insurance Company is a state-run nonprofit organization that in a relatively short time has become Florida’s largest commercial and residential insurer, with some 1.5 million policyholders.

While insurance companies, like any other company, enjoy having many customers, Citizens’ large volume of high-risk customers guarantees that the company has high exposure with every hurricane landfall. A wipeout of a large residential and commercial area could put Citizens at risk of being unable to pay all the claims brought against it. As a result, the company is rolling back the terms of its coverage.

HOME INSURANCE IN FLORIDA

This crisis is far from over for Florida homeowners insurance policyholders. While public authorities mull their next move, including giving insurance companies incentives to return to the state, all discussions are being conducted with one eye on the calendar: Hurricane season is coming.