ST. PETE BEACH, Fla. — In our ongoing series “Price of Paradise,” we focus on the rising costs of living in Tampa Bay.
Some residents are choosing to go without homeowners insurance rather than pay double-digit rate increases.
A St. Pete Beach couple made that decision years ago, but an industry expert warns taking on that high level of risk isn’t for everyone.
“We bought in 2001 and retired in 2007,” Jimmy Riley said as he showed us his three-bedroom, two-bath home in St. Pete Beach.
It started out as the Rileys' vacation home, but they moved in permanently in 2007.
That’s when they retired, paid off their mortgage and renovated it from top to bottom.
“We did everything. Everything was done,” Jimmy said.
$7,000 bill, high deductibles, and limits on coverage
But after hurricanes Charley, Frances and Wilma in 2004 and 2005 caused billions in damages to the Sunshine State, their property insurance payment skyrocketed to $7,000 a year, which didn’t even cover their patio or pool.
“Flood doesn’t cover it. The wind doesn’t cover it,” Jimmy said.
And that was with a $20,000 hurricane deductible.
“If the hurricane hit and did, say, $25,000 dollars worth of damage, are we gonna put a claim in for $5,000? I don’t think so because then they’re gonna raise my insurance,” Jimmy said.
So the Rileys decided to “go bare,” buying a bare-bones homeowners policy without wind or flood coverage.
“We had money that we put aside and said, we're not spending this for anything else unless something happens to the house. And we’ll save the money every year,” Heather Riley said.
“We’ve been putting away $7,000 a year for 13 years,” Jimmy said. “It would have been gone. Just given away to them, and they’d just keep raising my rates, no matter what. Even if they didn’t have a claim.”
But going bare is not for everybody.
If you have a mortgage, lenders require wind coverage and flood insurance if you are in a high-risk area.
Homeowners who do go bare need to have other money available, just in case.
“Because we could have gotten wiped out the first year, and $7,000 wasn’t going to help that much,” Heather said.
It’s a gamble Jimmy Riley believes is worth taking since his land is worth more than his home.
“The house may take you $300,000 or $400,000 to rebuild. But not $800,000,” Jimmy said.
He added his premium was based on his home being valued at $800,000.
20% of Florida homeowners don’t have property insurance
Mark Friedlander is a spokesperson for the Insurance Information Institute, which is tracking a huge increase in the number of homeowners going bare.
“Today, we are approaching 20% of Florida homeowners not having a property insurance policy,” said Friedlander.
He said rising insurance rates are to blame.
“The average cost of a home insurance policy in Florida today is running at about $6,000. That’s 42% higher than just a year ago,” Friedlander said.
Compare that to the national average rate of $1,700 a year.
“Most people without insurance are low-income families or retired families on fixed incomes. They have minimum means to spend on rebuilding or repairing the property where they live,” Friedlander said.
“It’s awful. It’s really awful,” Marie Hays said, describing the damage to her mobile home in Perry, Florida.
The small town near the Big Bend is about 20 miles from the Gulf of Mexico but was in the path of Hurricane Idalia, which struck in late August.
“My end of the trailer was torn back. And the window was broken on the bedroom side. And in the back, all these trees are down,” Hays said.
She and her husband paid cash for their mobile home in 2011 and don’t have homeowners insurance because they can’t afford it.
“This is my home, and this is all we have,” Hays said.
Federal government provides a safety net for uninsured homeowners
FEMA provides temporary housing and up to $40,000 in grants to cover repairs for uninsured homeowners like the Hays family.
There are also low-interest loans available to rebuild primary residences that are determined to be uninhabitable after a natural disaster.
“We recommend trying to find ways to keep your coverage and don’t drop it,” Friedlander said.
He said before going bare, you should explore other options, including shopping around, bundling home-car-and-life insurance, raising deductibles and searching for discounts.
“Look at the big picture. Is it worth taking the risk that you could lose your home, which in most cases is your most valuable asset families have? Can you replace that out of pocket? Nine out of 10 homeowners absolutely could not,” Friedlander said.
For the few who can afford to and are willing to take a risk, the Rileys recommend it.
“If you are in a position to do it, why give an insurance company that’s gonna look for every reason not to pay you… why give them your money?” Heather said.
“We wouldn’t have to wait 90 days because insurance companies have 90 days to respond to your claims. We’d start the next day and have cash to pay a contractor to start doing it,” Jimmy said.
If you have a story you think the I-Team should investigate, email us at adam@abcactionnews.com