Approximately 15% of Florida homeowners choose to self-insure their properties amid the state’s ongoing property insurance crisis, but experts caution that this option carries significant risks.

What Does Self-Insuring Mean?

Self-insuring involves setting aside funds in a savings or investment account to cover potential repairs or rebuilding costs instead of purchasing a traditional insurance policy. This approach is generally only available to homeowners who fully own their homes, as most mortgage agreements require active insurance coverage.

“Typically, if you have a mortgage loan, your contract will mandate that you maintain insurance on the home,” said Tasha Carter, Florida’s Insurance Consumer Advocate, in an interview with NBC affiliate WESH.

The Appeal and the Risks

While self-insuring can seem like an attractive alternative to dealing with insurance companies, Carter warns it requires significant financial preparation.

“Homeowners need substantial capital to ensure they can rebuild their home if it becomes uninhabitable or repair it in the event of major damage,” Carter explained.

Industry Experts Advise Against Self-Insuring

Mark Friedlander, a Florida spokesperson for the Insurance Information Institute, strongly advises against self-insuring, urging homeowners to explore more effective ways to manage their insurance costs.

“Bundling home and auto insurance is one of the best ways to secure discounts,” Friedlander suggested. “Adjusting your deductibles—choosing higher deductibles—can also significantly lower premiums.”

Friedlander also emphasized the importance of consulting with an insurance agent to identify tailored solutions for reducing costs.

“Going without insurance is the worst possible choice,” he said. “It’s extremely risky, especially in a state like Florida, where we face year-round hazards, from hurricanes to floods.”

Key Takeaway

For homeowners considering self-insurance, experts underscore the need to weigh the potential benefits against the financial risks. Without adequate savings, a single catastrophic event could leave them struggling to recover. Instead, leveraging strategies like policy bundling and adjusting deductibles may provide a safer and more sustainable solution.

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(Image credit: Florida Department of Financial Services)