INSURANCE TOO HIGH

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WEST PALM BEACH, Fla.—James and Laura Molinari left Chicago for a two-story stucco home in this city’s historic Flamingo Park neighborhood. The four-bedroom house was a short bridge away from Palm Beach island and walking distance to downtown West Palm Beach.

“We love it here,” said James, who plays golf with his 3-year-old son on Saturdays and can swim year-round in his backyard pool. 

Then the renewal for his home insurance arrived. The new rate for the year starting in September was around $121,000—more than seven times what the Molinaris said they paid last year, and more than 13 times what they paid when the family moved to Florida in 2019. 

While they found a better rate from another insurer, at about $33,000 it is still nearly double what they paid last year. The family this month listed the home for sale with an asking price of nearly $3.5 million after determining that insurance costs made staying there too expensive. Others in Flamingo Park told The Wall Street Journal they are drawing the same conclusion. 

“The for-sale signs are going up left and right,” James said of the neighborhood. 

Florida’s explosion in insurance premiums threatens to ground the state’s highflying housing market. Florida home prices soared more than 60% since 2019, according to real-estate brokerage Redfin. That rate has slowed more recently, and the state’s home prices in September edged up 2.7% over the previous year, Redfin said. 


Home-insurance costs are rising especially fast in Florida, where premiums have tripled in the past five years.
While rising interest rates and the large price run-up are the biggest factors, higher insurance costs are starting to play a role, brokers say. 

Home-insurance costs are rising everywhere, but they are rising especially fast in Florida where premiums have tripled in the past five years. Some premiums have increased by about nine times what they were last year, according to Oscar Seikaly, chief executive of NSI Insurance Group, who said he has handled insurance premiums that cost as much as $600,000 a year for multimillion-dollar homes.

“When you have a home that’s one million dollars or less, your insurance premium becomes higher than your mortgage,” he said.



A combination of extreme weather events, higher costs to rebuild and a rise in litigation has put the state’s insurance industry into crisis. Multiple insurers have pulled out of the state altogether. Gov. Ron DeSantis last year signed a bill meant to reduce some of the litigation and bring insurance costs down, but many in the industry say it isn’t enough.

The surge in insurance premiums has led many people who own their homes outright to drop insurance. While some of these homeowners without mortgages have gotten rid of all their insurance, others have dropped only their wind coverage, which pays off after a hurricane and where the prices have risen the fastest. Newer homes generally have experienced smaller run-ups in insurance costs. 

In few places are soaring premiums more apparent than in Flamingo Park, where a combination of older, historic homes and ballooning property values have caused insurance costs to double for many homeowners in the past year.


Pete and Susan Sinclair decided to drop their insurance when their renewal came in at around $10,000 this year, up 40% from last year.
Even though the West Palm Beach neighborhood resides on a coastal ridge, where most of the homes are well above sea level and outside the flood zone, insurance rates for wind coverage are soaring there. 

Mortgage lenders typically require borrowers to take out home insurance. But in Flamingo Park, more than a dozen homeowners who have paid off their mortgage said they have dropped some of their insurance coverage this year because they could no longer afford—or stomach—the payments. 

Those who go without it are taking a risk, especially in a state where powerful tropical storms and hurricanes are a frequent occurrence. The homeowner could be on the hook not only for the house if it is destroyed by a weather event, but also for all contents and any costs related to removing what remains. 

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