Which Homes Had The Biggest Insurance Increases

Q: Is it true that you can’t get home insurance for luxury homes in Florida anymore? Mike, Woodbridge, NJ

A: Luxury home insurance premiums have skyrocketed recently. There has been an exodus of home insurers from many places especially in Florida and California where natural disasters have become more frequent and severe. Insurance premiums in Florida have risen 400% in some areas over the past 5 years and home insurance premiums for mortgage loans over $1.5 million have risen the most. The problem is that luxury homes are often built in fire and disaster prone areas near coastlines, beaches, forests and deserts. Insurance companies pool risks to lower their financial exposure and prefer to spread that risk out over many similar homes. Consequently, luxury homes often require specialty insurance policies are almost always much more expensive than on a more common home. Also, the replacement cost for luxury homes tends to be much higher because of the high end materials that are used to build higher end homes which necessarily makes their corresponding insurance premiums higher as well. There are less options for home insurance for luxury homes in disaster prone states like Florida and California than there were before, however, a homeowner can normally find an insurer to take on the risk and offer an insurance policy on a luxury home as long as that homeowner is willing to pay a high enough insurance premium. Thanks for your question, Mike.

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