Homeowners who live in mega-mansions that only the upper echelons of society can afford pay corresponding premiums for their home insurance.
On Star Island — Miami’s most exclusive zip code, home to Jennifer Lopez, Sean “Diddy” Combs, Alex Rodriguez and Ken Griffin — residents’ insurance bills total a shocking $622,000 a year Bloomberg.
The six-figure amount is a big increase from the same policy last year, which was listed at $200,000, the outlet reported.
The increase in home insurance costs may come as a shock, Daryl Fairweather, Redfin’s chief economist, told The Post, but they are “justified by the expensive materials in the home or the contents of the home.”
“Rising costs of construction materials and labor [when damage to these homes occurs] – particularly on an island – could further contribute to the climate crisis,” Fairweather added.
However, a series of hurricanes in Florida – including Hurricane Idalia, which hit Florida’s Gulf Coast just last week, and Hurricane Lee, which could potentially hit South Florida next week – have heightened concerns about climate change and increased the cost of home insurance.
According to Bloomberg, premiums for homes valued at more than $1 million in the Sunshine State are rising faster than for homes with more modest values, with insurance costs rising two to 70 times year-over-year.
Cindy Zobian, managing director of insurance broker Alliant Private Client, told the outlet that the days of 20 percent increases are over and advances of up to 800 percent are closer to the new norm.
Making matters worse, these triple-digit rate increases are accompanied by plans with lower coverage, Zobian said. “If you get a rate increase of less than 20%, it’s almost a gift.”
Mark Friedlander, director of corporate communications at the Insurance Information Institute, told The Post that now that insurance premiums are so high, many Florida homeowners are “naked,” meaning they are giving up on their insurance policies altogether.
“20 percent have no property insurance. That’s one in five Florida homeowners in the state most vulnerable to hurricane damage in the U.S.,” Friedlander added.
“It is very worrying. “How many consumers can really afford to rebuild their home if they suffer the most catastrophic losses from a hurricane?” he asked.
Meanwhile, a Star Island home insured with full wind insurance for $60 million brought a premium of about $600,000 in 2022. According to Bloomberg, the insurer waived wind insurance this year and sent the homeowner to negotiate for wind insurance with other providers.
In the end, the homeowner paid $750,000 in premiums that year for $50 million less insurance coverage, Zobian told the outlet. Incredibly, this was “counted as a victory,” she added.
Another owner of a multimillion-dollar property decided to make a bet that his home would be exposed to a hurricane when he received an eye-popping $622,000 home insurance quote.
A third homeowner, who worked as a doctor, received a home insurance bill this year that showed a staggering 62% increase compared to last year. Instead of simply paying off the mortgage, the owner paid off his mortgage to get a cheaper policy, Bloomberg reported.
A bill of that size is high even for the top 1% of Star Island villa owners, so imagine what that means for the average Floridian.
According to the Insurance Information Institute, Florida residents pay an average of $6,000 per year for home insurance – a whopping 42% more than last year and more than three times the national average of $1,700.
Despite the massive increase in home insurance costs, many residents who once called the Northeast home have fled south to Florida in search of warmer weather and a lower cost of living.
Fairweather said that “people find it difficult to consider insurance costs and climate risks” when moving, especially “because you don’t really know until you get a quote from the insurance company, and that usually doesn’t happen until late in the home buying process.”
“And because the real estate market is so tough, a lot of people feel trapped when they get insurance quotes,” Fairweather added, which is typically the case after a home is placed in escrow.
According to financial information provider SmartAssetPeople making six figures in New York could save tens of thousands of dollars if they packed their bags and headed to Miami.
According to SmartAsset, a Manhattan resident making $650,000 would save $195,000 because Florida has no state income tax and the cost of living is lower.
According to the study, the same Manhattan man making $150,000 could save nearly $50,000 by moving to Miami.
A New Yorker’s cost of living would also drop dramatically if they moved from Manhattan – where average overhead costs are 137.6% higher than the national average.
According to the study, costs in Miami are only 22.8% higher than the national average.
About 160 Wall Street firms have followed suit, moving their headquarters from the Big Apple to Florida and other states further south, bringing with them nearly $1 trillion in assets under management, according to data compiled by 17,000 companies emerge Bloomberg.
To escape rampant crime, high taxes and increasingly exorbitant costs of living, 158 financial firms representing a whopping $993 billion in assets have packed up and left Manhattan, data shows.
Among the firms forced to flee: Icahn Capital Management – led by billionaire Carl Icahn – hedge fund tycoon Paul Singer’s Elliott Management and ARK Investment Management, led by closely watched tech stock guru Cathie Wood.