Hurricane Insurance

Current Rates, News & Information

Naturally occurring weather systems can really harm your area, especially hurricanes. Consider the long term financial damage Hurricane Katrina has inflicted onto the southern regions of Louisiana and Mississippi. This natural disaster caused damage exceeding the $200 billion mark.

Several industry insiders believe that the insurance industry's handling of the catastrophe was less then stellar. Instead of coming to the aid of their policyholders and providing immediately financial relief for emergency shelter, food and clothing, some insurance providers actually found a way to avoid providing compensation despite the "loss of use" clauses previously contracted for.

Policyholders Denied Coverage

One loophole to deny coverage was based on policyholders not having specific clauses for "flood damage" in their contracts. Less then half of those affected by Katrina with active insurance coverage had specific language ensuring that they would be be provided relief in case of flood damage. Those who did not were subjected to the lame duck response from FEMA during the crisis and relied on the government for assistance.

The valuable lessons learned from the aftermath of Hurricane Katrina are abundant. From a consumer's perspective, the truth regarding hurricane insurance has been exposed. Those seeking policies now know exactly what type of language their policies need in order to establish protection in case a violent storms rips. Aside from your basic home owners policy, insurance riders dedicated to damage relief specific to the event are required.

Good Home Insurance Riders

You should have the following insurance riders to truly protect your home:

• Flood Protection - A majority of hurricane damage does not occur from the high winds but from the immense amounts of water that flood the area. Only by having a contract specifically covering this type of water damage can you get the money needed to repair the damage to your home.
• Mold Coverage - The aftermath of major flooding in subtropic climates is mold. Some molds can prove to be toxic while others may cause mold allergies. Either way, you need to ask how your insurance policy will compensate you for this possibility.
• Affordable Deductibles - Even with hurricane insurance, you will be responsible for some of the expenses associated with your loss. The percentage you will be required to pay is determined on your insurance policy, but based on claim size, the final amount could be in the thousands.
• Extended Replacement Cost Clauses - Supply and demand after a storm can make the cost of reconstruction skyrocket. This clause will help cover the additional costs of both labor and materials, up to 20% above the limit in some states.
• Emergency Relief - Hurricane insurance tends to cover the damage to your property caused by winds. Flood insurance will help you out with qualified water damage. Unless otherwise specified, your policy may not provide money for emergency housing and it will be up to you to have the emergency savings in place to help you through.

If you reside in a hurricane prone state such as Florida, Louisiana, Mississippi or Texas, a review of your existing policy is a must. The laws regarding hurricane coverage vary from state by state and although there is a chance that your current policy has some hurricane protection, automatically assuming you are well protected is not recommended.

In Florida, the battle for funding for state-provided property insurance has resulted in lobbyists pushing for a 10 percent across-the-board rate increase. The increase requests comes from insistence that Florida insurance regulators are failing in their duties to ensure the proper funds sit in an insurance fund in the event that a major wind storm does more damage to the already vulnerable area.

Citizens Property Insurance Corporation is a state-backed insurance provider, it was created through a 2002 legislation to help Florida homeowners obtain affordable coverage that were not covered by private insurers. However, the insurance provider, which also maintains the Hurricane Catastrophe Fund, has had a difficult time maintaining a reasonable stash of money to pay claims in the event of a new storm because so many have already hit the area. Currently, Citizens has a surplus of $4 billion, which according to lobbyists, is not enough.

There have been a series of debates on ways to finance Citizens, but none have been immensely successful. Now, Barney Bishop III, president of Associated Industries of Florida, is asking lawmakers to impose a 10 percent increase across the board to help finance the fund. He says doing so will add an estimated $211.5 million and help ease the deficit the provider would see if a Category 2 hurricane was to hit the area.

However, members of the Office of Insurance Regulation (OIR) argue that an increase this large would make paying difficult for homeowners, especially when they're already paying a 1 percent assessment to help fund the Hurricane Catastrophe Fund. Instead, the organization hopes to strike a balance that will both finance the fund and offer reasonable rates to homeowners.

A consensus between the two groups has yet to be obtained.

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