What Hurricane Idalia Could Mean to Insurance Costs
Posted by Risk Management Partners Insurance Agency on
Hurricane Idalia hit the west coast of Florida last week, topping out with winds at 125mph, marking it as a dangerous Category 3 hurricane.
So what is a hurricane?
A hurricane is a massive storm system that forms over warm ocean waters. It has a swirling center known as the “eye,” where the weather is relatively calm, surrounded by a fierce storm with strong winds, heavy rain, and sometimes even tornadoes. Hurricanes are classified into categories based on their wind speeds, with Category 5 being the most severe.
Homeowners insurance: the basics
Now, let’s talk about your homeowners insurance. This policy typically covers damage to your home and personal belongings caused by various perils, but here’s where things get a bit tricky. While homeowners insurance typically covers damage from windstorms, it often comes with a significant exception: hurricanes.
In many coastal areas prone to hurricanes, insurers may exclude or limit coverage for hurricane-related damage. Instead, you’ll need a separate policy, aptly named “hurricane insurance” or “windstorm insurance,” to ensure your home is adequately protected in the event of a hurricane.
Flood insurance: a must-have
One critical thing to note is that homeowners insurance usually doesn’t cover flood damage, and flooding is a common occurrence during hurricanes. Whether your home is near the coast or further inland, flooding can happen. To protect yourself, it’s crucial to consider purchasing flood insurance through the National Flood Insurance Program (NFIP) or a private insurer. Without flood insurance, you could be left with a massive financial burden if your home sustains flood damage.
Should I be worried about my insurance premiums?
With every natural disaster comes insurance premium spikes. This is because with every natural disaster that destroys hundreds or thousands of homes and cars, the insurance companies need to find a way to make up for their loss and the billions of dollars they spend on repairs. The easiest and quickest way to do this is to raise insurance premiums at renewal. The article here talks about how commercial real estate insurance premiums will be on the rise. This year alone, due to Hurricane Ian, insurance rates rose to 93 cents per $100 from the previous year’s 68 cent per $100. With all the damaging natural disasters occurring in the U.S. over the past 10 or so years, we shouldn’t be surprised when insurance rates spike.
Read here about all the reasons why insurance rates could go up!