A waterfront home in Miami Beach’s Star Island.
Jeff Greenberg/Universal Images Group via Getty Images
Insurance rates in Florida have tripled in recent years, according to Bloomberg.For the ultra-rich, insurance companies could sell five- to six- figure policies.The cost goes up as more people move into coastal areas that are especially at risk, per Bloomberg.
How much would it cost to insure a $50 million mansion against hurricanes in the elite enclave of Florida’s Star Island?
According to a recent Bloomberg report, the owner of such a home was charged $622,000 per year.
Homeowners across Florida have seen rates increase threefold in the past few years, the report found.
For Florida’s billionaires and multimillionaires, such as Diddy, Jennifer Lopez, and Citadel CEO Ken Griffin who all have owned property in the Star Island enclave, insurance companies could dole out five- to six-figure policies.
Skyrocketing insurance rates come as more people are lured to the Sunshine State for its low taxes but have to deal with the risks of increasingly severe weather and rising sea levels.
Last week, Hurricane Idalia hit a Florida bay that’s never been struck with a hurricane since the National Weather Service began keeping records in the 1850s. And overall, warmer temperatures brought on by climate change are making hurricanes stronger, wetter, and slower.
“Florida is a unique marketplace where you see a culmination of hurricanes and severe weather, leading to Floridians paying the highest average insurance premium in the US,” Mark Friedlander, the director of Insurance Information Institute, previously told Insider.
Inflation also plays a role. The institute projected that property insurance rates in Florida could increase by at least 40% in 2023, stating that “policyholders’ premium rates will not be coming down any time soon.”
Typical homeowners are already dealing with the increase. The average premium is $6,000, more than three times the national average of $1,428, Insider reported.
Weather risks, along with a combination of other factors, have caused insurance companies to pivot and stop issuing new policies in Florida.
In June, Farmers Insurance joined a list of other major companies such as AAA that have withdrawn from offering new auto or home policies in the state.
California, a state that is prone to wildfires and extreme weather, has also experienced an exodus of insurance companies.
State Farm and Allstate will no longer accept new applications for home insurance, blaming high construction costs and the increasing risk of wildfires.
“There’s no company in the world that’s willing to take on a $50 million house in Napa Valley right now without charging over $1 million in insurance,” Oscar Seikaly, chief executive officer at NSI Insurance, told Bloomberg.