Hurricane season on the Atlantic Coast, including Florida, is a window of time between June and November. The likelihood of major storms usually peaks between August and October. During this season, Florida’s coastal areas, including several South Florida metropolitan areas, are at the highest risk. If you need help with a hurricane damage claim, contact the Fort Lauderdale Property Damage Attorneys at Englander Peebles today.
The Insurance Information Institute indicates that the number of people who live in Florida’s coastal zone is at 19.8 million as of 2015. This figure represents an increase of 4.2 million coastal residents in 2000. Approximately 98 percent of Florida’s total population resides in one of its coastal counties. Further, the impact of hurricanes (wind and rain) often extends farther inland.
According to the Insurance Information Institute, 7 out of 10 of the costliest hurricanes in U.S. history have hit Florida. The insured value of properties in Florida’s coast areas totaled $2.9 trillion in 2013, which constitutes 79 percent of Florida’s total value for its insured properties.
Florida homeowners should not wait for a hurricane to arrive to assess their insurance coverage and review their existing policies. Many insurance companies will not issue policies when a storm is approaching.
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Florida’s Hurricane Windstorm Statutory Insurance Requirements
The Florida legislature enacted a statute that requires insurance companies to include coverage for property damage caused by wind in all of their residential property insurance policies. This coverage extends to windstorm damage for any storm declared to be a hurricane by the National Hurricane Center.
This includes any damage to a building’s interior caused by rain, hail, or sand if the windstorm’s direct force first causes damage to the building and causes an opening through which such rain, hail, or sand comes in and damages the interior.
The period covered under an insurance policy’s hurricane provision begins from the National Hurricane Center’s issuance of a hurricane warning or watch for any county in Florida, continues through the period when any county experiences hurricane conditions, and ends 72 hours after the National Hurricane Center terminates the hurricane warning or watch issued for any county in Florida.
Under the statute, covered residential policies include both personal insurance lines and commercial insurance lines. Personal insurance lines include, for example, homeowner’s, condominium unit owner’s, tenant’s, mobile homeowner’s, and cooperative unit owner’s policies. Commercial insurance lines, on the other hand, include an apartment building, condominium association, common homeowner’s association, or cooperative association policies.
Mandatory Premium Discounts
Florida statute also requires insurers to provide discounts on the hurricane windstorm coverage of premiums for Florida residents who install certain features on their homes that make them more resistant to wind. These features may either be fixtures or construction techniques that are proven to reduce a homeowner’s losses due to windstorm damage in a hurricane.
Typically, insurers require policyholders to get a certified inspector to examine the structure for the requisite features for wind resistance. These features may include, for example, impact-rated glass, hurricane-rated garage doors, roof-to-wall connections, hurricane shutters, and roof covering. The state will post discounts it has approved for licensed insurers online at the Florida Office of Insurance Regulation website.
Deductibles for Hurricane Coverage
Insurance companies are allowed to include separate deductibles to their policies that are specifically applicable to windstorm damage that is caused by hurricanes. These separate hurricane deductibles are a percentage of the amount of coverage on the property or a dollar amount deductible higher than the deductibles for other causes of property damage or loss.
Under Florida law, these hurricane deductible provisions are triggered by losses from hurricane windstorms and remain in effect for the period of the hurricane. If the windstorm damage is not from a hurricane, then the insurance policy’s general deductible amount is applicable.
Canceling a Policy
The insurance commissioner of Florida may prohibit insurers from canceling an insurance policy if for at least ninety days after the dwelling or residential property damaged by a hurricane has been repaired if the governor declares that Florida is under a state of emergency. If an insurance company makes a determination to cancel a policy, Florida statute requires that the insurer provided the insured with at least ninety days of notice that the policy will terminate ninety days after the residential property is repaired.
Nevertheless, the statute permits insurers to cancel a policy sooner if the insured fails to pay the premium, commits a material fraud or misstatement, causes an unreasonable delay in effecting repairs to the property, or the insurance company as paid out the total amount of the policy limits. If an insurer cancels a policy, and such cancellation is supposed to take effect during a hurricane, then the Florida statute delays the effective date of such cancellation until the hurricane’s end.
Florida statute prohibits insurance companies from canceling policies because policyholders filed claims because of hurricanes or other natural disasters. Insurance companies may only due so if they can show that the insured has failed to take reasonably necessary actions to prevent the recurrence of property damage.
Florida’s Safety Nets
There are several safety nets that the Florida legislature created for individuals and insurance companies because of the risk of damaging hurricanes. The first is a safety net for residential property owners in high-risk places who are unable to find private insurance coverage. This safety net is Citizens Property Insurance Corporation, which is the state’s largest insurer, covering approximately 1.2 million policyholders. This company is currently the state’s largest insurer of private properties.
Additionally, Florida also created a state-run reinsurance program for insurance companies. This program – the Florida Hurricane Catastrophe Fund – provides a stable and continuous source of reimbursement funding to insurers to refund a portion of their catastrophic losses from hurricane damage.
Florida state government encourages Florida property owners to determine how to reinforce their homes against hurricanes and to reduce potential losses due to hurricane damage. Therefore, the state created the Florida Hurricane Damage Mitigation Program. The program offers free home inspections to qualifying homeowners to identify means of strengthening their homes against hurricanes. Additionally, the program offers grants to property owners to perform retrofitting work on existing property to add mitigation improvements.
Separate Flood Insurance
Homeowners’ insurance policies typically exclude flood coverage. As such, Congress passed the National Flood Insurance Act in 1968, which created the National Flood Insurance Program (NFIP). The NFIP is a federally-administered program that provides insurance coverage to residential property owners in communities that are at risk of flooding. In exchange for providing coverage, these communities agree to enforce floodplain management requirements and other restrictions on land-use to reduce the likelihood of flood damage in the future.
Many lenders impose a general requirement for borrowers to buy flood insurance in high-risk areas to acquire a mortgage; nevertheless, there is no federal or state requirement for property owners to buy NFIP’s flood insurance and, unfortunately, there are many property owners who refuse to get flood coverage. When disasters such as hurricanes strike, homeowners who have no flood insurance are left searching for coverage under their homeowners’ policies. Under these policies, whether an insured homeowner is entitled to coverage depends on the question of whether the damages to the home were caused primarily by floodwater or wind brought by the hurricane.
When a policy provides coverage for hurricanes, including windstorms, insurance companies often interpret these policies as providing protection for damage from rain and wind – not flooding. When an insured homeowner files a claim after a hurricane, there may be a dispute arising from the claim between the homeowner and the insurance company over whether the damage to the home was caused by high winds, which is likely covered, or by flooding, which is likely excluded from coverage.
Typically, flood insurance will cover flood damage to a residential property’s foundation, plumbing, electrical system, carpeting, window blinds, certain appliances, and central air conditioning, among others. Flood insurance usually will not cover external structures outside of the main residential building such as swimming pools, detached garages, etc. Flood insurance also likely will not cover damage caused by mold, mildew, or moisture if the insurance company makes a finding that the damage to the home was preventable by the homeowner.
Under the NFIP, homeowners can acquire property insurance of up to $250,000 for flood damage and personal property for up to $100,000. The cost of a flood insurance policy premium for a single-family home averages around $650 per year, but the NFIP can re-draw flood maps in a way that may cause significant increases in the cost of premiums.
Wind Versus Flood Issues in Post-Hurricane Claims
As discussed above, many residential property insurance policies include windstorm coverage but exclude flood damage. Depending on the language of the insurance policy at issue, the distinction between wind damage and flood damage is critical and the timing sequence of damage from events such as hurricanes can be important in the likelihood of success for getting payouts for a post-hurricane claim.
Unfortunately, insurance companies often overlook facts surrounding claims that would support coverage, such as scenarios where the actual cause of the loss claimed is damage from the wind after a hurricane that may have subsequently allowed flood damage to occur.
Policyholders should be concerned about the issue of multiple possible causes, particularly when it comes to homeowners’ insurance policies that have anti-concurrent causation clauses or ACC clauses, which insurers often rely on in denying coverage when both windstorm and flood damage are involved.
Many standard homeowners’ insurance policies contain ACC clauses, which provide that where an excluded peril directly or indirectly contributes to the cause of a loss, then the company may exclude coverage regardless of other causes or events that contribute either concurrently or in any sequence to the claimed loss.
ACC clauses commonly apply where there are two events or perils that cause damage to a property, and the application of such clauses depends on identifying the loss. When the company can apportion the damages between competing causes, ACC clauses do not apply. However, where the company is unable to apportion damages because the two causes combine to cause loss or damage, ACC clauses are implicated.
In hurricane-related damage where wind and water typically combine, policyholders must closely examine how those competing causes interact with each other. ACC clauses are major provisions of traditional homeowners’ insurance policies that may serve to preclude coverage completely when one cause that is excluded allegedly contributes to a loss. Notably, even in insurance policies that don’t contain ACC clauses, there are provisions that make coverage in hurricane-related losses dependent on the sequence in time of the damage and how multiple causes interact.
There are two different ways that Florida courts analyze cases where competing events cause the loss claimed by the insured homeowner. The courts may use the efficient proximate cause doctrine or the concurrent loss doctrine.
- Efficient Proximate Cause
Courts in Florida have generally examined facts surrounding disputed claims involving competing causes using the efficient proximate cause doctrine in determining what caused a loss to a property owner. The efficient proximate cause doctrine asks a jury or the judge to determine which of the competing events that caused the loss had the most significance. In cases where the court uses the efficient proximate cause doctrine, coverage disputes with policies containing ACC clauses that also involve wind and flood damage may hang on contending testimonies from experts for both parties.
- Concurrent Cause Doctrine
The other doctrine that a Florida court may apply in insurance claims involving competing causes is the concurrent cause doctrine. This doctrine typically applies where there are independent causes of damage that combine and result in a single loss. Under this doctrine, if one of the causes of the loss is covered under the insurance policy, then the insurer is required to pay for the loss. This doctrine tends to favor homeowners more unless an ACC clause is present in the policy. If an ACC clause is present in the policy, then the insurer will likely deny the claim.
Florida Valued Policy Law
Florida statutes contain a provision known as Florida’s valued policy law. The purpose of this provision is to fix how damages are measured in instances of total loss.
The law requires insurance companies to determine the property’s insurable value during the time that it writes the policy. It provides that, in the case of a total loss caused by a covered peril, the insurance company must pay the amount of which the property was insured as provided in the policy and for which it has charged and received payment from an owner.
Under the valued policy provisions of Florida Statutes, if the insurer is liable to the owner for a residence damaged by a covered peril, and the residence is a total loss, then the insurer’s liability must be the full amount of the policy.
Total and Constructive Loss
Florida courts apply two tests to identify what counts as a total loss under the valued policy law. First is the identity test, where a court will determine if the damage to the home is so severe that the home has lost its character and identity as a structure even though a part of the structure’s components remain standing and may be used for some other purpose.
Second is the restoration test, which determines whether a structure is a total loss by looking at whether a reasonable owner would not use what is left of the structure as a basis for restoring the structure to its condition before the loss.
Additionally, if an insured structure that suffers damage from a covered peril and an existing regulation or ordinance prevents repairs from being made, then the property may be considered a constructive total loss. Under such circumstances, insurers must pay out the full value of the policy to the homeowner.
Co-insurance clauses may serve to limit recovery. Co-insurance clauses are provisions in a policy that penalize a homeowner’s recovery for losses if the policy limit is not, at least, equivalent to a particular percentage (typically 80 percent) of the insured property’s value.
Partial Losses by Fire or Lightning
Florida’s valued policy law has particular provisions dealing with partial losses. Specifically, the law provides that where an insured homeowner suffers a partial loss due to lightning or fire, the insurer is liable for the actual amount of the loss but not exceeding the value of the insurance policy.
Contact a Hurricane Damage Claim Lawyer at Englander Peebles
If you or a loved one has suffered property damage because of a hurricane and are seeking to file a homeowners’ insurance claim, you should not hesitate to consult immediately with a Fort Lauderdale hurricane damage claims lawyer. Insurance policies are complex documents; the attorneys at Englander Peebles will analyze your homeowner’s insurance policy and assist you in navigating the insurance claim process for losses you suffered to your residence because of a hurricane.
Englander Peebles will fight for your right to obtain compensation so that you can rebuild or repair your property. Don’t fight your insurance company alone. Contact Englander Peebles today at (954) 231-1384 or through our online form to schedule your free initial consultation with one of our seasoned property damage attorneys.