Cheryl Montgomery and her late husband could not find insurance for their 1925 cottage near Lake Hollingsworth, despite spending more than $150,000 to restore it. | Barry Friedman, LkldNow

Farmers Insurance Group announced Tuesday that it is pulling out of Florida, becoming the 15th company to stop insuring homes in the state in the past 18 months — on top of seven companies that have been declared insolvent in the same timeframe.

Insurance Commissioner Michael Yaworsky sent the company a letter saying he was disappointed by the hastiness of the decision and how it was communicated, and “troubled by how this decision may have cascading impacts to policyholders.”

For Lakeland homeowners, it’s another blow in an already-bruising local insurance market.  

Policies are hard to find, especially for older homes

Lacey Gardner, a licensed agent with Family Insurance Centers in Lakeland, said “technically” there are still eight to 10 insurers writing policies statewide. But most have strict underwriting guidelines that preclude a majority of homes in our area.

Gardner blames Senate Bill 2D, passed during the Florida Legislature’s special session in May 2022.

“They passed a law that said carriers can’t deny coverage based solely on the age of a roof as long as it’s less than 15 years old. They also can’t non-renew a policy if the roof has five years of useful life or more,” she said.

The measure was intended to curb fraudulent roof claims and unnecessary replacements. But it has had a chilling, unintended consequence for owners of older homes.

“Now carriers just deny it based on the year of construction of the home,” Gardner said. For homes built before 1950 — which includes many Lakeland properties — “it can be really hard to find any carrier that will write a policy.”

Cutoff years vary by insurer. Gardner said one company she works with won’t insure any homes built before 1995. Another will only cover homes that are 2015 or newer.

Jared Faniel, a State Farm agent in Lakeland for the past four years, said State Farm’s underwriting requirements are based on changes in construction codes.

“We can’t write anything older than 2004,” Faniel said.

For many, Citizens Property Insurance is the only option

With nowhere else to go, an increasing number of local homeowners have turned to state-backed Citizens Property Insurance Corp, which was created 20 years ago as an insurer of last resort. Statewide, Citizens’ policy count recently topped 1.3 million, nearly triple its total from three years ago.

Its growth has been even more staggering within Polk County, where the number of Citizens policies has multiplied more than eight-fold in the past few years — from 2,040 at the start of 2020 to 17,177 last month. The rapid increase has triggered concerns about the company’s ability to serve policyholders in the event of a catastrophe.

Gracie Hernandez is one of those new Citizens policyholders. In June 2021, she bought a 1951 bungalow near Lake Bonny, a few blocks from Southeastern University.

“This is our first home. Before, we were renting a duplex in Lake Morton,” Hernandez said. “The market was crazy. We looked at 13 or 14 houses, toured this one for 20 minutes on a Saturday, and then put in a bid.” 

In retrospect, she’s not sure they should have acted so quickly. Soon after moving in, they discovered a plumbing issue related to cast iron pipes. It led to a claim with their insurer at the time: Universal Property & Casualty Insurance Co.

“When we started off with Universal, our premium was $3,200,” Hernandez said. “When it came time to renew, it was $4,500. Universal paused writing new policies after Hurricane Ian. 

She started calling around and quickly realized there weren’t many other options.

“I ended up going with Citizens because no one else would cover me.”

Gracie Hernandez, Lakeland homeowner

“I ended up going with Citizens because no one else would cover me. They offered me homeowners insurance for $3,759, but my hurricane deductible is $11,000,” Hernandez said.

Premiums have increased 40 to 50% in the past year

When homeowners do find insurance, the cost can be jaw-dropping. In 2022, Florida residents paid almost three times the national average for property insurance — $4,231 per year compared with $1,544 — according to the Insurance Information Institute.

This year, the institute projected that premiums in Florida will rise more than 40 percent, topping $5,900 annually. The Florida Association of Insurance Agents puts it even higher, predicting at its conference last month that the average homeowners insurance premium will hit $6,400 by the end of the year.

Both groups point out that in addition to fraud and litigation, the industry is facing pressures related to Hurricane Ian, inflation, reinsurance costs and supply chain disruptions.

“When your home that you purchased for $250,000 has to be rebuilt and it’s going to cost $380,000 due to the cost of construction, I have to insure your house for $380,000 because I’m insuring it to rebuild it,” Gardner explained.

Claudia Slate, a retired Florida Southern College professor, said the Progressive Insurance premium on her 1994 south Lakeland home went from $5,100 to over $8,000 this year, despite having no claims and a clear roof inspection. 

“The agent practically admitted to me that they were trying to push me out,” Slate said. And it worked. “We were finally able to get a Citizens policy with a premium of $5,110.”

However, Citizens premiums are also poised to go up. It has asked the Office of Insurance Regulation to approve average increases of 13.1% for homeowners and 10.1% for condo owners in Polk County this year. If approved, the new rates would take effect Nov. 1, although policy holders wouldn’t pay more until their renewal date.

“No one wants their rates to go up. We completely understand that,” Citizens President and CEO Tim Cerio said. “But the fact is that Citizens rates remain actuarially unsound and artificially low. This inadequacy is unsustainable and heightens the risk of assessments on all Florida insurance consumers.”

At least 1 in 8 homeowners going without insurance

Going without insurance is not an option for everyone, particularly those with mortgages through traditional lenders. But the costs and lack of options have driven some Lakelanders with paid-off homes like Cheryl Montgomery, 76, to take the risk.

Montgomery and her late husband Donald won a Residential Beautification Award from the city two years ago for their restored 1925 cottage near Lake Hollingsworth. 

The couple did extensive renovations after it was damaged by back-to-back hurricanes in 2005, pouring more than $150,000 into the 3-bedroom home. But despite all of the improvements, including complete rewiring and replumbing, they couldn’t find an insurance carrier. 

“It’s crazy … They look at the year the house was built and take absolutely no consideration for all the work to upgrade it.”

cheryl montgomery, former lakeland resident

“I called every major company and they all wanted over $4,000 — and that would be with a huge deductible,” she said. “It’s crazy … They look at the year the house was built and take absolutely no consideration for all the work to upgrade it.”

Montgomery said they decided to take their chances.

“If we lost the house, we had the lot and enough funds to rebuild,” she said. “But it’s like being out in a storm without a raincoat — and it’s not only me. Everyone I meet; especially in the area with older homes.”

After three years without homeowners’ insurance, Montgomery sold her home in February and moved to South Tampa to be closer to her daughter and grandchildren.

It’s hard to know exactly how many Florida homeowners are uninsured. In 2019, the U.S. Census Bureau’s American Housing Survey reported that 12.8 percent — 1 in 8 — owner-occupied homes in Florida don’t have insurance.

Given how the market has changed since then, Gardner says, “I’m fairly confident that has doubled, if not more.”

Legislative efforts may not help any time soon

Gov. Ron DeSantis summoned lawmakers to Tallahassee in May 2022 and again in December 2022 to address a host of insurance problems including sky-high premiums, rampant fraud and excessive litigation. Insurers’ net underwriting losses were $1.7 billion in 2021, even without any major hurricanes. 

The December special session produced pro-industry measures that disincentivized lawsuits by eliminating “one-way” attorney fees, prohibited homeowners from assigning their insurance benefits to a third party, and added $1 billion to a safety net reinsurance fund.

Lawmakers also passed a bipartisan insurer accountability measure in May that was consumer-focused, making companies more accountable for how they handle claims.

Many Lakeland agents are hopeful that, over time, the new measures will help to stabilize the market. But relief may not come any time soon.

“My perspective is it helped start the process of creating a more stable market, but it’s going to take a long time for us to get past the repercussions of all the fraudulent activity in the past few years,” Gardner said. “I think we’re five years in the making before we see anything out of it.” 

Advice for homeowners looking for insurance

Gardner’s advice to homeowners who are struggling to find coverage is:

  • Start with the inspection process: Get four-point and wind mitigation inspections. 
  • Check out the My Safe Florida Home grant program. You can get a free hurricane analysis with recommendations. The program also might help pay for home-strengthening improvements.
  • If there are any major maintenance or repair issues, fix them if you can. Adding wind mitigation upgrades can make a big difference in insurance costs.
  • Work with an agent. It doesn’t cost more, and they can help explain all of the options. 
  • Some agents are independent and others are “captive.” The difference is whether they work with many companies or just one. To get the full range of options, you might need to compare both. 
  • Share the inspection reports, any quotes you’ve gotten, and information about your prior insurance so you can be sure you’re comparing “apples to apples.”
  • Don’t blindly accept a policy recommended by your mortgage broker. Make sure you know what’s covered and what deductibles apply.
  • Understand the limitations of Citizens. “They’re not financially stable,” Gardner said. “They do not have the reserves to withstand any kind of catastrophic event.”

To help consumers know what to expect, Florida’s Office of Insurance Regulation has a rate comparison tool that shows typical rates by county and type of construction. 

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Cindy Glover moved to Lakeland in 2021 after spending two decades in South Florida. Her career has included journalism, education, digital marketing and public relations. She worked for the Albuquerque Journal and South Florida Sun-Sentinel and spent a year as a community engagement coordinator for the City of Lakeland before joining LkldNow.

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1 Comment

  1. Would love to know the donation amounts from insurance companies to elected state officials.

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