Adequate Hurricane Insurance and Disaster Survival 

Though Texas and Louisiana have been most recently and severely damaged by hurricanes, no other state suffers such regular and apparently increasing damage from hurricanes as Florida.  The very damaging 2004 and 2005 hurricane seasons have added to the already high anxiety many feel regarding their personal and fiscal survival in the case of yet another busy hurricane season. 

However, Florida has several million households, over 60% by FEMA estimates, that don’t have adequate hurricane or flood coverage.  Given that over three-quarters of the state’s residents live along the Gulf and Atlantic Coat areas, there are a great many people in danger of losing everything in a storm and requiring federal assistance to avoid destitution and homelessness.  The odds of this happening, for a perhaps as many as a million Floridians, are now estimated at 1 in 5 for any given year.

Though they cost more than most people can easily afford, a regular homeowners’ insurance policy does not cover damage from a hurricane.  According to the custom of private insurance companies, hurricanes are considered special events and require their own type of insurance.  The additional hurricane coverage will cost more – a great deal more in some cases – and covers only the damage from wind, tornados and rain damage incurred when a storm strikes.

Making sure you survive a hurricane is a matter of paying attention to storm warnings and taking quick and decisive action to protect yourself and your things from being exposed to dangerous weather.  The first thing to consider is what category of storm on the Saffir-Simpson hurricane intensity scale your area can expect.  This will give you a good idea of what sort of conditions you need to prepare for.

Always have an emergency kit ready to go including maps, a radio, plenty of batteries, an extra measure of fuel for the car (in case evacuation becomes mandatory or advisable) as well as food and water for several days.  If you don’t already have them stored somewhere else, take your important papers and transportable valuables with you, just in case.  This should include the documentation detailing the condition of your house before the storm hit.  Photos are a great way to do this. 

When the evacuation order comes, it’s best to go as quickly as possible to avoid traffic jams and long lines for supplies.  Many people stock up on the necessary equipment and goods at the beginning of the hurricane season and keep them at the ready throughout.  Many people stick to designated evacuation routes.  If you think you’ll go a different direction, be sure you check to make sure they’re not though particularly low-lying areas, especially if the storm is bearing down upon you.  At least 72 hours is ideal for making a successful escape from a storm that doesn’t turn into a traffic jam nightmare where you’re begging for strangers to share a motel with.

Preparation and monitoring the weather as soon as a tropical depression is announced will make you that much more likely to be prepared to survive a Florida hurricane.

Homeowners’ Insurance in Florida and Deductible Creep

Anyone who owns property in Florida knows the state of insurance is poor.  Since 2004 and 2005, the price of insurance has skyrocketed due to many billions of dollars being paid out in claims. In an effort to keep their premiums down to levels they can actually afford, many Floridians are allowing the companies to slowly bring up the amount of their deductible to what some consider dangerous levels.

The most common deductible for hurricane damage in Florida is 2% of the total value of the policy. More than 70% of homes in Florida have this “special” hurricane deductible rate that does not apply to regular wind damage, thunderstorms and even tornados.  However, if any of these events occur when there’s an active hurricane (according to the National Weather Service) in the area, the special rate kicks in.  Many homeowners were surprised to find out just how much money this can be when they lost everything in 2004. For example, coverage of $250,000 results in a 2% deductible of $5,000. A 5% deductible would be $12,500. After a hurricane, many homeowners may not be able to come up with that deductible, particularly if their jobs are affected by the storm.

This is the result of a 1996 state law that was passed to keep insurers in the state after the massive losses associated with Hurricane Andrew in 1992. Many insurers did go bankrupt after Andrew, but while the insurance industry took up the cry of a “crisis” in insurance, that is a gross mischaracterization. The insurers’ own financial records show massive profits, despite the so-called “crisis” that arises after a bad hurricane season.

Insurance company representatives recommend homeowners have the amount of their deductible set aside in a savings account. While this may sound reasonable to an insurance company with billions of dollars in profits, as premiums go up with the cost of everything else (especially as the price of oil continues to climb), people are less likely than ever to be able to put such a large chunk of change away and call it anything but the kids’ college fund. 

Regardless of your ability to save, you should be prepared to get by while you wait for your claim to go through.  Often this can be several weeks or even months (and in some cases, years) while you might not have a job either.  Most policies cover living expenses during the time you have to spend away from your damaged home.  Such bills can add up very quickly, especially if you have your family with you.  Unless you’re staying with relatives, be prepared to dip into your savings no matter what your deductible. And make sure you save receipts and have documentation for every penny of expense resulting from living away from home.

It is always a good idea to contact your insurance agent each year before the hurricane season for a review of their policy.  Pay special attention to the policy value with regards to the cost of actually replacing their home, in the current market and up to current code, will at least be shaving their deductible off the actual value of their home.  The same goes for goods within your home. 

Deductibles can be adjusted upwards if you simply can’t afford your policy.  Some homeowners have hurricane deductibles up to 5% of the policy value, and that can be a lot of money.  This deductible does not cover the separate deductible of flood insurance.  The federal government offers flood insurance, even if your regular insurer arranges it for you – but they remain separate coverages.

Many other types of disaster covered by homeowner’s insurance have a stable $500 deductible.  Hurricanes are simply different in action and reaction.  Though inexpensive homes (under $100,000) often have deductibles in the $500 range, high priced homes such as those over $350,000 often have a mandated 5% deductible.  Carefully consider if that’s the sort of bill you can live with.  On the other hand, accepting such a higher deductible can lower your premium by as much as 20%.