Even though the state has been largely hurricane free the past three years, new clouds are forming on the horizon as many Florida insurance companies may look to raise rates. And if they don't get the rates that they want, you should expect them to start dropping and cancelling policies again.

State Farm Florida is leading the way on this. After Florida recently rejected the company's 47% rate increase, State Farm is appealing that decision in court. You should expect other companies to follow State Farm's lead.

Prior to Hurricane Andrew in 1992 it was easy to find homeowners insurance in Florida. It was simply a matter of picking up the phone book and calling your nearest agent. There were hundreds of companies who wanted your business.

That kind of Florida home insurance market is long gone - replaced today by a dysfunctional market where less than 40 companies are actively writing any new business at any time in the state. And unlike the old days where companies had large surpluses and deep multinational parents to help absorb hurricane claims, most of the home insurance companies still active in the market are very small, Florida based companies.

Many of these Florida based companies just opened their doors for business during the past three years. As a result, there is a lot of concern about many of these companies being undercapitalized and lacking in post hurricane claim processing experience - a frightening combination that could result in long delays in getting paid after a Florida hurricane.

In this brave new world of smaller, newer, lightly funded Florida home insurance companies, shopping for insurance the old way just won't work anymore. As a smart shopper, you have to change the way you shop for insurance to be successful in today's Florida home insurance market.

Here are some steps that you can take as a smart consumer to find the lowest cost Florida homeowners insurance:

Don't use a captive insurance agent that only represents a limited number of companies. Instead pick an independent agent who represents multiple carriers that will allow the agent to offer you several options.

Don't work with just one independent agent. Work with several. Why? Because a single agent doesn't carry all of the companies that are actively writing new business in today's Florida home insurance marketplace.

Find out the names of the Florida home insurance companies that use a general agent or write policies directly without using an independent agent network. This is significant because some companies have cut costs by eliminating insurance agent commissions. If you pursue this, make sure you are familiar with every line of coverage on your current policy because you won't have the benefit of the personalized service of an independent agent. You'll have more choices this way, but you will be on your own.

Find out the financial ratings of each of the companies you are considering. Don't pick these companies solely based on the lowest price. You have to find out how much surplus each company has on hand to pay their claims when they happen.

Ask your agent about the company's risk diversification. How many policies does the company have in Florida? Where are their policies situated? How are they distributed across the State of Florida? Are they reasonably spread out across the state or are they primarily located in the hurricane prone areas of South Florida?

Find out how long the company has been in business and whether they have any experience processing Florida hurricane claims. You don't want your claim to be "on the job training" for a brand new company. Check with your agent to find out the history of complaints filed against the company.

In this market, your goal is to create as much competition for your policy as possible. After you've received quotes from multiple agents and companies its time to narrow the field. Don't make your decision on price alone. Make sure the coverage from multiple companies is identical. After you've looked at the coverage, narrow the field further based on the financials and customer service history of each company.

Give serious consideration to paying more for a policy from a company that has more surplus, stronger financials, has been in business longer, and has fewer complaints in its history.

Last but not least - don't go into Florida's state run insurance company of last resort - Citizens Property Insurance Corporation unless you have no other private company alternatives.

If you follow these steps you'll create the most competition possible for your Florida home insurance business and you'll be doing all that you can to get the most for your insurance dollar.