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Property insurance is costing more in Florida due to lawsuits

Florida accounts for 76 percent of the insurance lawsuits in the country, and it's costing you more to insure your home.

ST. PETERSBURG, Fla. — The next time you shop for property insurance, you are likely going to find fewer options and perhaps pay more for your policy. 

A handful of insurers are no longer writing new policies, and several carriers are even liquidating, including Tampa-based Avatar. Policyholders have been receiving notices in the mail that they will soon no longer have coverage. 

There are a few factors at play here. 

The company that gives insurers their financial stability rating, Demotech, has found several are not on solid ground. Pinellas County Insurance Agent Brian Ford says that seems to be the beginning of the end for many insurers if they can't find investors to back them up. He also says litigation is a major factor in whether a carrier stays in business. 

The number of lawsuits has more than doubled over the last seven years. 

“After Hurricane Andrew happened in the ‘90s, you saw the larger insurance companies leave the state right. You saw State Farm, Allstate, Nationwide, Travelers, Liberty Mutual, they all kind of picked up their bags and left because they didn't like the catastrophic nature of what can happen here in Florida," Ford said.

"But, what we've also allowed in Florida, we've allowed a lot of litigation abuse. There's things like contingency multipliers where attorneys can get two to three times their normal billable hour which is already really high."

Ford adds that smaller insurers are having a tough time with that litigation. He believes that if lawmakers don't act soon, there will be an insurance crisis. He says a special session later this year would be too late. 

More customers could potentially end up with state-run Citizens Property Insurance if no other companies will cover them. The governor says he supports making changes. 

Citizens is asking for an 11 percent increase in its rates. The president says they are charging 30 to 40 percent below the market rate and need to raise rates to keep up.

In just the last year, Citizens added more than 230,000 new policies and is expected to add about another 200,000 by the end of the year.

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