In mid-July, AAA announced that it would discontinue some of its insurance coverage in Florida, joining the growing list of insurers that are taking a step back from the state, AP News reported.
Earlier in July, Farmers Insurance stopped offering its branded insurance policies in the state, becoming the fourth company to leave entirely in the last year.
Now, AP News reported that AAA won't renew "a very small percentage" of its policies for Florida residents. The affected policies are bundled homeowners and auto policies underwritten by Auto Club Insurance Company of Florida. Policyholders have already been notified of the change.
According to the company's statement, the move is due to the rising operating costs in Florida. That's in part thanks to the incredibly destructive weather the state experienced during the 2022 hurricane season.
Natural disasters such as hurricanes have been getting more frequent in recent years. As the planet heats up, the weather is becoming less stable, leading to storms, floods, droughts, wildfires, and dangerous heat waves.
For an insurer, that's terrible news. To make money, an insurance company must receive more in premiums than it pays out in claims yearly. If a region is hit with a natural disaster, there will be an unusually high number of claims, and the insurer will lose money.
This is true across the country, but Florida, in particular, is vulnerable to hurricanes and other tropical storms. Other coastal and disaster-prone areas like California are also losing insurance companies due to worries over costs.
For companies that do stay, the cost of business is rising while the market gets less competitive, and that means higher costs for consumers.
According to AP News, the average price of a homeowners policy in Florida is $6,000 per year, almost four times the national average of $1,700. About 15% of homeowners simply go without, risking losing their homes in the next storm.
Florida homeowner Lawrence Kolin is one of those affected by AAA's decision, AP News reported. Not only can he not renew with AAA, but he can't even get another insurance company to give him a quote.
"My house has survived 84 years of hurricane seasons," Kolin told AP News. "It's just an untenable situation."
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