Homeowners Impacted by Hurricanes
October 15, 2024

In the aftermath of Hurricanes Helene and Milton, some Florida residents may find themselves navigating a difficult recovery process, even those equipped with homeowner’s insurance. Fact is the responsible insurance carriers will classify these storms as individually distinct events. That alone could complicate claims for those who hadn’t documented damage from the first destructive storm.
Some industry experts have suggested this could lead to increased chances of initial claim denials. A significant portion of the financial toll of these major storms that hit the Sunshine State just two weeks apart is due to extensive flooding that is not covered under Florida’s standard homeowner policies. In many cases, separate policies will be needed to address damages for either or both storms.
Determining damage from these dual disasters poses challenges. Residents must differentiate between the impacts of Helene and Milton to file accurate claims. Insurance adjusters need to ascertain whether water damage was caused by flooding, roof leaks, or wind-driven rain, each with different coverage implications. Unfortunately, many hurricane policies exclude coverage for wind-driven rain, and only about one in four Florida residents have flood insurance in place.
Challenges from a one-two punch...
In late September, Hurricane Helene struck the Big Bend region of the Florida panhandle with a storm surge that exceeded 15 feet and its impact extended as far south as Tampa Bay. This resulted in billions of dollars of widespread death and destruction from Florida to Tennessee. Days later, Hurricane Milton made landfall as a Category 3 hurricane just south of Tampa Bay and moved across central Florida with deadly tornado outbreaks and extensive flooding.
The economic and insured losses from these high winds, storm surges, heavy rainfall, and tornadoes are considerable. The departure of national insurance firms from Florida, coupled with local insurers canceling plans, has left many residents relying on Citizens Property Insurance Corp, the state-backed nonprofit. These insurance challenges will likely affect the reinsurance market significantly, particularly for Florida specialist companies with lower retentions.
State Storm Insurance Reforms
Reforms in Florida aimed at motivating insurance companies to return to the state market have inadvertently left homeowners with limited legal options when disputing claims. Previously, policyholders might have considered legal action if their claims were denied. However, the current system now requires homeowners to pay out-of-pocket expenses to sue their insurers. This shift originated from catastrophic insurance reforms passed two years ago, which aimed to curb contingency lawsuits against the insurance sector.
Although these reforms may have helped stabilize the homeowner’s insurance market, the reduced risk of legal repercussions may incentivize insurance companies to deny claims more freely. True financial benefits of the reforms will only become clear after they withstand catastrophic events and prove their effectiveness in bolstering the private insurance market. This has sparked calls for more comprehensive reforms, especially considering the Sunshine State’s frequent exposure to hurricanes, storm surge and natural flooding.
National Flood insurance Program
According to the Florida Department of Services, “Anywhere it rains, it can flood!” Although Florida law does not require flood insurance for all properties, mortgage lenders and federally-backed home loans most often do. This helps offset the cost to repair or replace your home due to major flooding. For homeowners who lack appropriate flood insurance, insurers often deny claims right from the start. A significant number of those who own their properties do outright lack specific coverages for hurricane-related damage like wind, rain and flood.
The plight of these homeowners is further complicated by the limitations of the National Flood Insurance Program (NFIP). This government-backed initiative covers 95% of flood insurance policyholders in the U.S. but only compensates for up to 50% of a property's assessed value (excluding the value of the land). In the event of catastrophic damage surpassing this threshold, homeowners are required to rebuild largely out-of-pocket. Plus, NFIP does not cover temporary housing, making homeowners pay for relocation expenses during reconstruction.
State-Backed Nonprofit Home Insurance
Florida’s homeowners insurance landscape faced significant challenges as national insurers retreated from the state leaving many homeowners reliant on Citizens Property Insurance Corp. A state-backed nonprofit that was designed to be an insurer of last resort for homeowners who couldn’t secure private coverage. Now with over a million active policies, Citizens has become Florida's largest insurance provider. Hurricanes Helene and Milton exacerbated this situation, with Citizens now expected to pay out billions in claims.
Eligibility for Citizens Insurance is strict. A homeowner qualifies only if their lowest private insurance quote exceeds Citizens’ by more than 20%, and the property's value must be under $700,000, except in Miami-Dade and Monroe counties, where the cap is $1 million. Governor Ron DeSantis had previously warned that Citizens lacked the solvency to manage such a vast number of policies and expressed concerns about the impact of future storms. Despite these challenges, recent reinsurance renewals indicate a stable yet cautious market.
Citizens cannot go insolvent like a private insurer, as they can impose premium surcharges on its policyholders and potentially other Floridians to cover claims, which certainly raises many economic and political concerns. However, Citizens does appear to have substantial resources, including $15 billion in reserves and reinsurance, to address immediate claims from Hurricanes Milton and Helene without resorting to surcharges. But, the cost of the destruction further stresses the system with concerns of reinsurance coverage.
In situations involving hurricane and storm property damage, especially in areas prone to natural disasters like Florida, insurance claims can be particularly challenging. Our experienced staff of independent agents can help find the home, condo or renters insurance policy that works best for you. Call 1-833-450-9490 to speak with the pros at Nsurance Nation today.