It may strike many island residents that they are powerless in the face of skyrocketing insurance rates, with little option but to gratefully write a check if they can get homeowners coverage at all. But some are fighting back.

A growing number of homeowners are taking the advice offered in TV commercials of one leading insurance company to “Pay only for what you need.” 

While this is not quite as simple as it sounds, industry experts say there are several steps residents can take to control their costs for insurance, depending on where they live and what level of risk they’re willing to assume for themselves.

One piece of advice the experts agree on unanimously: Don’t give up on Vero Beach, and don’t even THINK about moving somewhere else in the Sunshine State. As bad as things are here at the moment with insurance, they’re worse in other parts of Florida.

Why is Vero better?  Apparently because people tend to be more honest here in their dealings with insurance companies, and the incidence of fraud or suspect claims is lower.

Costs have risen even more – and availability of insurance is even less – on the Florida Gold Coast including Palm Beach, Broward and Miami-Dade counties as well Monroe County which consists of the Florida Keys, where inflated claims are a major problem.

And along the Gulf Coast, insurers are still skittish from the billion-dollar loss they suffered last year in the wake of Hurricane Ian.  In the Panhandle, they’re still recovering from similarly destructive storms. And many places in Central Florida face a sinkhole problem that has made insurance companies very reluctant to write any policies at all.

The first piece of advice to control insurance costs is to try, if you can, to pay off your mortgage.  This will give a homeowner more freedom to determine how much and what kind of insurance coverage they want to carry, and how much risk they are willing to take.

If you have a mortgage, mortgage lenders will require that you carry full insurance coverage on the home – and they don’t care how much it costs. If you balk, they’ll just slap the outrageous cost of “force placed” insurance – also called “lender placed” insurance – on top of your monthly mortgage payments.

Although some people have tried to fight this, in the end there may be little you can do about it.

Once you own your home outright, however, nobody forces you to carry any insurance at all. However, Dick Haverland, a retired insurance executive who now lives in John’s Island but still stays in touch with the industry, said that whatever you decide about insuring or not insuring against natural disasters, you will still want to carry liability insurance, which is generally still available and affordable.

“You don’t want some tradesman, delivery person or visitor to slip and fall in your home and sue you for a million bucks,” Haverland explained.

Haverland said some people who own their homes outright may want to consider self-insuring their property(ies) – with the exorbitant insurance rates they would have to pay for insurance over a period of a decade or so, they might actually save money even if they have a catastrophic loss.

“You may also want to consider a high deductible,” Haverland said. “If you own a million-dollar home without a mortgage in this area, you probably have a good-size IRA and some other assets, so you have the ability to absorb a decent-size loss yourself. Therefore, if you’re willing to agree to a $50,000 or maybe even a $100,000 deductible, you can still get a homeowners insurance rate against catastrophic loss that’s quite adequate. You then become a very appealing prospect to the insurance companies and an attractive proposition to them.”

The crisis in the insurance industry was caused mainly by the inability of the reinsurance companies to absorb more capacity, but high-deductible policies do not put extra strain on the re-insurance giants, which makes them an excellent tool to combat exorbitant price increases.

Becoming self-insured is just what Jody and Janet Goodhue, snowbirds from Connecticut, are considering for their home in the Sea Colony development off North State Road A1A on the barrier island in Indian River Shores. They had been with the Amica Mutual insurance company for their automobiles and home in Connecticut for 55 years and were happy with their carrier; the company had always achieved top ratings among insurance carriers.

When they bought their Vero Beach home in 2015, now valued at just over $1 million, at first Amica said they weren’t in the Florida market and wouldn’t insure it, but the company relented after a home inspection because of the long-standing relationship, and Amica has insured the local home for the past eight years.

“However, the annual premium has been climbing every year,” said Goodhue, “and in order to have a somewhat reasonable premium, the deductible has risen to about $50,000. In other words, the deductible is at a point where it might make sense to self-insure, which more owners of high-end properties are doing. The chance of having a loss of that magnitude, although it certainly can occur, is slim.”

On the mainland, at the Cambridge Park development on the south side of State Road 60 close to I-95, the Board of Directors of the Home Owners Association (HOA) is trying to change the bylaws which at present require all homeowners to be fully insured.

“Allowing us to self-insure our homes individually could save us approximately $2,000 per year, depending on future rates,” explained Martha Bear, who just completed a term of service on the HOA board.

Anyone planning to go the self-insurance route, however, should research their HOA rules first before dropping or changing coverage.

Arnie and Monique Summers (he’s retired; she’s not yet) found another solution for their home on the mainland just behind the Indian River Mall. They were able to keep their homeowners’ insurance premium to just under $1,000 a year by accepting considerably less coverage. Basically, they now have their home insured only against fire, which they believed was their main risk.

They no longer have insurance against wind, storm and water damage – in other words, hurricanes – because they considered that was a justifiable risk to assume where they are several miles inland.

“I saved over $1,000 when I last renewed our policy, even though I know it was with less coverage,” said Summers. He said he had been close to dropping all insurance coverage because of the threatened price increases of more than double the previous rate, but he found keeping protection against fire an acceptable compromise.

If dropping or severely limiting your coverage is not an option for you, or if you’re not comfortable enough with it, you want to think carefully before giving your insurance company an excuse to cancel you.

If they want you to put on a new roof as a condition for renewal, it may well be cheaper than being forced to find a new policy elsewhere. If they insist on a new hot water heater, you may not want to argue.  It may be a good idea to just try to buy some time and hope the insurance climate will improve in a year or two.

Dan Collins of the independent Tom Collins insurance agency says insurance is typically a cyclical industry and the pendulum will swing back at some point.

But no one knows just how soon. The homeowners insurance reform law passed late last year by the Florida state legislature should help as it prohibited the assignment of claims to third parties like lawyers,  who tend to drive up the cost of claims.

The new law also sought to make the state-owned insurance company of last resort, Citizens, a less attractive option, thus making it more feasible for commercial carriers to enter or re-enter the Florida market. That should create more competition.

However, independent brokers have not seen much effect from the new Florida law yet in lower rates.

Former Vero Beach Mayor Harry Howle, who also runs an independent insurance agency on the island, said he believes that by August of this year, most if not all of the pending cases in litigation over claims assigned to third-party lawyers will have wound their way through the justice system, and the insurance companies should start to see their claims experience improve.

In the meantime, carriers like Farmers Insurance continue to pull out of part or all of the Florida market, leaving homeowners and businesses searching for coverage.

And as for the main underlying problem in the insurance market, the limited capacity for reinsurance, Haverland predicts that some of the “big-money boys” will see an opportunity to get into the business and provide more capacity, thereby making the pendulum swing back there, too, and ease the crisis.

“But these things don’t happen overnight,” Haverland said. “It’ll take time.  My prediction is that it’ll take about two years before we start to see any kind of stability in the reinsurance market.”