The monthly Florida Underwriter is an excellent publication that I read to stay informed about many current issues facing the Florida insurance market. It is also very good at noting significant legal and political issues which impact insurance. Even the advertisements sometime reflect trends of insurance coverage that are significant to our clients.
Two coverage issues that need to be addressed by many have to do with high deductibles for windstorm loss and the rising tide of vacant structures. For example, Citizens Property Insurance Corporation has a 5% wind loss deductible. Many commercial policies also carry such a deductible. The roof of a building ruined in a windstorm often happens to be approximately 5% of the structure’s insured value.
If the property has a significant value, 5% sounds small, but can equal millions. We routinely represent structures insured for more than 50 million dollars. Five percent of that is $2.5 million. Given today’s credit markets, many owners of such structures may have a hard time raising sums to cover the deductible cost.
Deductible buy down coverage helps eliminate this problem. For example, Citon Insurance was advertising deductible buy down wind coverage. The cost to insure a $375,000 deductible was $17,941. Not cheap, but it represents a way to cover expenses which may otherwise be unaffordable. Condominium associations may even have fiduciary obligations to purchase the coverage if available.
Vacant property is becoming more common in this economic climate. Most property policies do not cover property which is vacant for more than 60 days. So many agents are selling specialized vacant property coverage.
Proper coverage prevents problems following a loss. It is always a good idea for policyholders to review their properties with their agents to keep fully covered. We strongly recommend that our clients do so before hurricane season. "Just Do It" should be "Just Do It Now" in the insurance world.
