In a recent report by ABC Action News, investigative reporter Adam Walser delves into the growing trend among Florida homeowners to forgo comprehensive insurance coverage due to skyrocketing rates. One St. Pete Beach couple, Jimmy and Heather Riley, made the bold decision to “go bare” years ago, opting out of wind and flood insurance. This move has saved them over $100,000, but as Walser points out, it’s a gamble that’s not for everyone.
The Rileys’ Decision to Go Bare
Jimmy and Heather Riley purchased their three-bedroom, two-bath home in St. Pete Beach in 2001, initially as a vacation spot. By 2007, they had retired, paid off their mortgage, and moved in permanently. However, after a series of hurricanes in 2004 and 2005 caused billions in damages across Florida, the Rileys saw their property insurance premiums skyrocket to $7,000 annually. Despite this high cost, their policy didn’t even cover damage to their pool or patio. “Flood doesn’t cover it. Wind doesn’t cover it,” Jimmy Riley explained during the interview with Walser.
A Calculated Risk
Frustrated by the limitations of their policy and the steep costs, the Rileys decided to drop wind and flood coverage altogether, choosing instead to set aside $7,000 each year as a self-insurance fund. Over 13 years, they saved more than $100,000 – money that would have otherwise gone to insurance companies. “It would have been gone. Just given away to them, and they’d just keep raising my rates,” Jimmy Riley noted, emphasizing their decision to take matters into their own hands.
The Financial Gamble
While the Rileys’ strategy has paid off so far, it’s a risky approach. As Heather Riley acknowledged to Walser, “We could have gotten wiped out the first year, and $7,000 wasn’t going to help that much.” For the Rileys, the decision to go bare was partially based on the value of their land, which they believe is worth more than their home. This calculation made the risk more palatable, but it’s a gamble not everyone can afford to take.
Growing Trend in Florida
Mark Friedlander, a spokesperson for the Insurance Information Institute, told Walser that the number of Florida homeowners opting out of property insurance is on the rise. “Today, we are approaching 20% of Florida homeowners not having a property insurance policy,” Friedlander revealed, attributing this trend to soaring insurance rates. The average cost of a home insurance policy in Florida has surged to around $6,000 annually, a 42% increase from just a year ago, compared to the national average of $1,700.
A Dangerous Game for Many
Friedlander cautioned against going bare, especially for those who can’t afford to replace their homes out of pocket. He stressed the importance of exploring other options, such as shopping around for better rates, bundling insurance policies, raising deductibles, and searching for discounts before deciding to drop coverage entirely. “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?” Friedlander warned during his conversation with Walser.
Federal Safety Nets
For those who do lose their homes and lack insurance, the federal government offers some relief. FEMA provides temporary housing and grants of up to $40,000 for repairs, as well as low-interest loans to rebuild primary residences deemed uninhabitable after disasters. However, this safety net may not be enough to fully recover from a significant loss, making the decision to go bare a high-stakes gamble.
The Rileys’ Perspective
Despite the risks, the Rileys stand by their decision. Heather Riley questioned the value of paying insurance companies that might deny claims when disaster strikes. “Why give an insurance company that’s gonna look for every reason not to pay you… why give them your money?” she asked. Jimmy Riley echoed this sentiment, pointing out that by self-insuring, they can begin repairs immediately after a disaster, without waiting for an insurance company to process their claim.
“Insurance is a Scam”
People in the comments shared their thoughts: “A lot of people don’t realize they are going bare with insurance anyway. Insurance companies are professionals at not paying coverage.”
Another commenter added: “can you imagine that – paying an insurance company for 14 years with no claims?? basically you handed them $100K free and clear for absolutely nothing and no returns whatsoever.”
One person added: “Should be titled, older generation finds out insurance is a scam”
A Controversial Choice
The Rileys’ story, as reported by Walser, illustrates a controversial choice that more Floridians are considering as insurance rates climb ever higher. While going bare has saved the Rileys a significant amount of money, it’s a decision that requires careful consideration and a willingness to accept the risks involved.
Final Thoughts
As the cost of living and insurance rates continue to rise in Florida, more homeowners may be tempted to follow in the Rileys’ footsteps. However, as Adam Walser’s report makes clear, this path is fraught with potential pitfalls. For those who can afford the risk, going bare might be a viable strategy, but for many others, it could lead to financial ruin. The key takeaway? Weigh the risks carefully and consider all your options before making such a significant decision.
Potential Consequences
What do you think? Would you be willing to take the financial risk of going bare on insurance if it meant saving a significant amount of money, or do the potential consequences outweigh the benefits? How do you balance the desire to save on insurance premiums with the need for peace of mind in protecting your home? In an era of rising insurance costs, what alternative strategies would you consider to safeguard your property without breaking the bank?
Explore the full insights by viewing the video on ABC Action News’ YouTube channel here.
