Florida natives are no strangers to hurricanes and windstorms. These storms can be frightening and devastating and insurance coverage for hurricane damage is of utmost importance to experienced property owners in Florida. Unfortunately, due to the number of severe and damaging storms over the past 10 years, Florida home insurance for those who live in hurricane prone areas such as the Sunshine state has become very expensive.
If you own a home, coverage will be needed for the house and all of its contents. This is typically included in most homeowner’s policies. With respect to insurance for those who live in geographical areas plagued by hurricanes, their insurer will often include provisions on a homeowner's insurance policy which call for two separate deductibles, one for standard losses and one specifically for use when you have hurricane damage. While the standard deductible is usually set to a round number like $250, $500, or $1000, a hurricane deductible is set as a percentage of coverage A, which is the amount of coverage set as the limit for your house. This is usually set at 2 percent of coverage “A”.
Beware of something called “inflation guard” with respect to your hurricane deductible. Inflation guard is a mechanism built in to most homeowners insurance policies that automatically increases the coverage limit on the building to take into account the increase in property value due to inflation. If the inflation guard pushes your policy limit up by 4 percent in one year, your deducible also increases by 4 percent. This is important when you consider that your deductible represents the amount that you have to pay toward repairs on a total loss or on a partial loss.
An important thing to note about hurricanes is that damage is caused by both wind and floods. The reason that this is so important is that flood damage is not covered under a typical homeowner's insurance policy. In the event of a total loss to your home, you might find that most of the damage was caused by flooding and only a small portion of the damage was caused by windstorm. If that is the case, the insurance company will only reimburse you for the wind-damaged portion of your home, leaving you to pay for the remaining damage out of pocket. Homeowner's in Florida should have a flood insurance policy as well for full insurance protection in the event of a hurricane with damaging winds and floodwaters. Because flood insurance is issued through a federal insurance program, flood insurance is subject to pre-determined flood zones. These zones will affect the cost and availability of a flood insurance policy.
For those who cannot obtain flood insurance coverage, the state of Florida has a government subsidized insurance company set up for just this situation. That company is Citizen’s Property Insurance Corporation, which is a non-profit, government owned insurance company. Florida’s legislature recognized that a widespread lack of homeowner's insurance coverage could cause economic devastation across the state in the event of severe hurricane, and that property insurance coverage is a necessary mechanism to maintain the Florida economy.
If you currently live in Florida or are considering relocation to Florida, be sure to take property insurance issues seriously. The state is in a geographically vulnerable position with respect to hurricane exposure and a properly designed insurance package is an essential component of property ownership in the state of Florida.