If you hate talking about insurance as much as I do, you’ll be tempted to turn the page and look at the real estate ads, but don’t. This is the year that you really need to read your policy, since the insurance companies are still crying over the disastrous 2024 hurricane season, and they’re in a bad mood.
According to a lengthy piece in The Wall Street Journal, the five biggest home insurers as a group didn’t pay out on more than 44% of the claims closed last year. This left anyone with homeowners insurance policies to pay fully or partially for repairs to their property.
There are several reasons for this, but it all has to do with money. Companies are getting tougher on claims by using a narrow definition of acceptable claims. In addition, they’re raising deductibles, especially on specific risks like hurricanes, and establishing tighter criteria for claims on expensive repairs like roofs. Homeowners themselves are also choosing to increase their deductibles in light of increasing premiums.
Florida, of course, is in the danger zone, driven by climate change and coastal development. We had the highest rate of nonpayouts in 2024, affecting more than two in five homeowner claims that year. This was significantly higher than the previous five-year average of 34%. Insurance companies claim that because there were more flood events that year, there were more claims declined that weren’t covered by normal homeowners policies.
If you feel your claim has been unfairly denied by the insurance company, there are options: ask for a letter outlining the reasons for the denial with documentation; compile additional evidence; file an appeal; if the appeal is denied, file a complaint with the state insurance regulator; or, as a last resort, hire an attorney or public adjuster and be prepared to wait.
If you are a condo owner, there is another important item to understand — one that many condo owners don’t know about until there is a natural disaster. I’m talking about something called loss assessment. In Florida, under Florida Statute 627.714, all residential condominium unit owner policies are legally required to include at least $2,000 in property loss assessment.
This coverage helps pay your share if the condo association levies a special assessment for a covered property loss. The condo association will prepare a letter to be submitted to the homeowners insurance company stating the amount of the special assessment, the date and the named storm it’s related to. Homeowners can purchase optional endorsements to increase limits well above the $2,000 statutory minimum. Like any insurance you purchase, you have to weigh the benefits against the cost. I lived in a waterfront condominium for 20 years before I received compensation for a loss assessment.
I’ve declined to state the five biggest insurers that did not pay out claims. However, if you want to know if your insurance company is one of the top five, this information can be easily found in The Wall Street Journal’s archives for June of this year.
No one can change the mood of national insurance companies, which will likely go on for some time. But being proactive on your own behalf by reading your insurance policy, talking to your insurance agent or broker and crunching numbers to reduce your premium could help. Do I dare say it — it’s hurricane season again.
