Hurricane Milton Insurance: Preparing for and Filing Claims

Preparing for a hurricane like Milton is crucial, and having the right insurance coverage can make a huge difference in your financial well-being.

To start, make sure you have a comprehensive homeowners or renters insurance policy that covers wind damage and flooding. This will help protect your home and belongings from the storm's impact.

In Florida, where Milton is located, it's essential to have a separate flood insurance policy, as standard homeowners insurance typically doesn't cover flood damage.

Review your policy documents and take note of your deductible, coverage limits, and any exclusions before the storm hits.

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As Hurricane Milton approaches, it's essential to take immediate action to protect your home and family.

Make sure to board up all windows and doors with plywood or shutters, as recommended by the National Weather Service. This will help prevent wind-borne debris from causing damage.

Stock up on non-perishable food, water, and medications in case you lose power or access to basic necessities. A minimum of three days' worth of supplies is recommended.

Bring outdoor furniture, decorations, and other items inside to prevent them from becoming projectiles in strong winds.

Charge your phone, laptop, and any other essential devices in case the power goes out.

Stay informed about the storm's progress through a battery-powered radio or a weather app on your phone.

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Hurricane Milton insurance policies typically have a deductible, which is the amount you pay out of pocket before your insurance coverage kicks in. This can range from $1,000 to $10,000 or more, depending on the policy.

Homeowners in high-risk areas like coastal regions may need to pay higher premiums to account for the increased risk of damage from hurricanes. For example, a study found that homeowners in Florida paid an average of 45% more for hurricane insurance than those in other parts of the country.

Insurance companies often use wind speed to determine the severity of damage and the amount of coverage needed. In the case of Hurricane Milton, winds reached speeds of up to 120 mph, causing widespread destruction.

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A deductible is an amount you pay out of pocket for damages before your insurance coverage kicks in. This amount can be a flat fee or a percentage of your home's insured value.

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In most cases, a standard deductible applies to your home insurance policy. However, there are specific deductibles that come into effect when a hurricane watch or warning is issued in Florida, and these deductibles remain in place until 72 hours after the last watch or warning is lifted.

If you have a hurricane deductible, you'll be responsible for paying it out of pocket before your insurance coverage kicks in. This can be a significant amount, especially if you have a high-value home.

A hurricane deductible is usually a percentage of your home's insured value, typically ranging from 2% to 5%. For example, if your home is insured for $300,000 and you have a 2% hurricane deductible, you would be responsible for paying $6,000 before the insurance begins to cover the rest of the damage costs.

Here are some examples of hurricane deductibles based on a home's insured value:

It's worth noting that some homeowners may have opted to pay extra for a lower or flat hurricane deductible. This can be a good option if you live in an area prone to hurricanes and want to minimize your out-of-pocket costs.

Milton's impact on the insurance industry is expected to be significant, with an estimated loss of $20 billion to $40 billion.

The exact extent of the loss won't be known for years, as it takes time to identify, adjust, and settle claims on a massive scale.

Hurricanes like Milton can produce enormous losses, and the insurance industry is already expecting a loss exceeding $20 billion.

This is similar to the losses from hurricanes Irma (2017) and Ian (2022), which also resulted in significant industry losses.

The post-event range of potential loss is expected to be narrower than the range discussed before the event, which varied from $15 billion to $150 billion.

We can expect Milton to have a substantial impact on the insurance industry, and it's essential to monitor the actuarial implications.

The industry's ability to manage and recover from such losses will be crucial in the coming years.

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The insurance industry has been quick to respond to the devastation caused by Hurricane Milton. State Farm has donated $1.75 million to help non-profits provide emergency shelter, food supplies, and hygiene items for people in the affected areas.

State Farm's catastrophe response team is working to assess covered damages and provide claim handling help for policyholders. They are also leveraging technology to provide virtual claim handling options, allowing customers to file and track their claims online, submit documentation electronically, and participate in video calls with their claim representative.

Several State Farm Customer Care sites were opened for customers to file a claim and get answers to general questions in person. However, due to high customer activity, those sites have since been closed, but claims associates and State Farm agents continue to help customers through the claims process.

State Farm has received almost 10,000 total auto and homeowner claims in Florida from Milton, and this number is expected to increase as more residents return home to discover and report damage from the storm.

Claims Assistance Options:

Florida insurance carriers are facing a major event with Hurricane Milton, which could put some companies under surplus pressure. Several new startup companies have entered the market in 2024, and this event might be the largest in their company's history.

At least eight new startup companies began writing business in Florida in 2024, and several of these companies have significant exposure in Hillsborough, Manatee, Pinellas, and Sarasota counties. This means they may incur full retention of losses up to the beginning of their reinsurance towers, and additional losses for any portions of the reinsurance layers they opted to retain.

The total number of policies insured by the insurer of last resort, Citizens Property Insurance Corporation, peaked at 1.41 million as of September 30, 2023, and has since fallen to 1.26 million as of September 30, 2024.

Here's a breakdown of the counties most affected by Hurricane Milton and the potential impact on carriers:

The Florida Department of State has issued an emergency rule to address the impact of Hurricane Milton on the insurance market. This rule aims to provide relief to policyholders and carriers alike.

Condo associations facing significant property damage from Hurricane Milton should consider working with a Florida insurance lawyer to help navigate the claims process. Insurance companies often try to minimize payouts, so a lawyer can negotiate on behalf of the condo association to ensure a fair settlement and counter low offers.

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A lawyer can review insurance policies to clarify coverage and obligations, ensuring all damages are properly claimed. This includes analyzing the master and individual policies to understand the condo association's rights and responsibilities.

An experienced lawyer can also assist with documentation, ensuring that all damage assessments, repair estimates, and reports are properly documented to strengthen the claim. This helps prevent delays or underpayment.

If the insurance company continues to delay or deny a valid claim, a lawyer can file a lawsuit to recover the full compensation owed to the condo association. They can also work to resolve disputes regarding the adequacy of the repair payout or the speed at which funds are disbursed.

Here are some key services a Florida insurance lawyer can provide to condo associations:

Hurricane Milton is expected to have a manageable impact on the reinsurance industry. The storm is likely to affect several of the lowest layers of Florida reinsurance towers, passing losses to reinsurers participating on those layers. These layers typically carry a high price and are expected to be hit with some frequency.

The repeated occurrence of events like Irma, Ian, Milton, and 2018's Michael tapping these lower-lying layers over the past decade raises questions about the sustainability of current prices for this coverage. Florida offered state-backed reinsurance for these working layers via the Reinsurance to Assist Policyholders and the Florida Optional Reinsurance Assistance Program in 2022 and 2023.

We do not expect material impacts to more remote layers across most reinsurance programs. The ILS industry has gradually retreated from lower layers of Florida reinsurance towers over the past five years, opting to write fewer of the types of deals most often exposed to a hurricane of Milton's size.

Some pockets of the ILS industry, particularly those participating on lower-lying reinsurance layers, are likely to face more tangible challenges when reserving for Milton. These funds may also encounter constraints from locked collateral as the January renewal cycle approaches.

The ILS industry has a prominent hedging tool called the industry loss warranty, which pays out based on the sum total of insured industry losses. Some funds hedging against the predicted active hurricane season may see Milton's ultimate loss slip under the attachment points of some of their hedges.

Here's a summary of the expected impact on the reinsurance industry:

Filing a timely insurance claim is crucial after Hurricane Milton, as Florida law generally requires claims to be filed within a reasonable timeframe. Any delays could result in claim denial.

To report damage to your insurance company, you should do so as soon as possible. This will help ensure that your claim is processed promptly.

Here are some essential steps to take when filing a claim:

Be mindful of deadlines and the specific requirements of each insurer to ensure the claim progresses smoothly.

Condo associations in Florida often face difficulties dealing with insurance companies after a major hurricane. Insufficient documentation can lead to claim denial, so it's essential to keep detailed records of damage and estimates.

Pre-existing damage can be a significant issue, with insurers claiming that some damage existed before the hurricane. This can result in reduced payouts, leaving condo associations with a financial burden.

Disputes over covered areas can cause confusion and delays, as there may be disagreements over which damages fall under the master policy versus individual unit owner policies.

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Insurance companies often offer lower amounts than needed for full repairs, hoping condo associations will settle quickly. This can be a challenge for associations trying to cover the costs of repairs.

Here are some common reasons why claims are denied or underpaid:

Delayed responses from insurers can leave homeowners in a stressful limbo while they wait to begin repairs or replacements. Insurance companies may struggle to keep up with the volume of claims, leading to delays in processing claims and disbursing payments.

Insurance adjusters may undervalue the damage, resulting in payouts that fall short of what is needed to restore your property. This can lead to disputes over coverage, with insurers trying to attribute more of the damage to the type of disaster that isn’t covered under the policy.

Homeowners often find themselves in disputes over what their insurance policies actually cover. For instance, some policies differentiate between wind damage and flood damage, and insurers may try to attribute more of the damage to the type of disaster that isn’t covered under the policy.

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After a hurricane like Milton, it's essential to manage repairs and insurance funds efficiently. Make temporary repairs to prevent further damage as soon as you can do so safely. These repairs include tarping your roof, removing a tree from on top of your home or building, drying your home, and boarding up broken windows.

Save all your receipts and photos, as the insurance company will ask for them later. Keep damaged items so your insurance company can see them, and don't discard them before showing them to the insurance company.

Once your claim is approved, the insurance company will release funds in stages based on the progress of repairs. This means that your attorney can help ensure that funds are released on time and according to the policy terms.

In some cases, disputes may arise regarding the adequacy of the repair payout or the speed at which funds are disbursed. If this happens, our expert insurance claim lawyers can work on your behalf to resolve these issues and ensure repairs are completed without unnecessary delays.

Here are some important steps to follow when managing repairs and insurance funds:

Filing a claim for hurricane damage can be a complex process, but condo associations need to know the steps involved to protect their interests. Understanding the claims process is crucial to avoid delays or underpayment.

Condo associations should hire licensed contractors or engineers to assess the extent of the damage, as this will provide an accurate picture of the damage. This assessment is essential to document all findings with photos, videos, and detailed reports.

A Florida insurance lawyer can help navigate the claims process, ensuring that all damages are properly claimed and that the condo association receives a fair settlement. An attorney can analyze the master and individual policies to clarify coverage and obligations.

Here are some key services a Florida insurance lawyer can provide:

Don't try to handle the claims process alone, as insurance companies often try to minimize payouts. A lawyer can negotiate on behalf of the condo association to ensure a fair settlement and counter low offers.