Many factors affect the cost of a homeowner’s windstorm coverage. To a great extent, the premium cost is based on decisions the homeowner chooses to make.
Insurer: Windstorm coverage is available through the state-administered Citizens Property Insurance Corporation, as well as private-sector P&C carriers. Different carriers will offer different levels of windstorm coverage at different prices. Not all carriers will necessarily underwrite windstorm coverage in all areas of Florida, so a homeowner may be constrained in the choice of carrier by the location of his or her property. The lack of a competitive private windstorm insurance market is one of the most important insurance-related issues facing Florida today.
Location: In addition to affecting the availability of competing carriers, the location of the insured’s property affects its exposure to possible windstorm damage. Generally speaking, coastal areas are more susceptible to wind damage, inland properties present less risk to insurers. As a result, property owners near the coasts will pay higher windstorm premiums than inland homeowners. Short of picking up and moving, homeowners have little control over this factor.
Deductible: Under Florida law, windstorm policyholders may choose a flat $500 deductible, or a 2%, 5% or 10% deductible depending on the actual value of the home. The larger the deductible chosen by the policy holder, the lower the windstorm premium. Of course, if the policyholder selects a higher deductible, out-of-pocket expenses in the event of a hurricane claim may be higher. Homeowners should consider their financial ability to shoulder those possible higher out-of-pocket expenses when deciding whether to opt for a higher deductible.
Mitigation improvements: As we’ve learned, state law requires insurance companies to offer discounts for strengthening a home against windstorm damage. The Uniform Verification Form outlines the concerns of most interest to insurers: roofing, continuous load, gable ends and opening protection. Mitigation efforts addressing these areas of the building envelope can result in significant discounts for the homeowner. These discounts apply only to the hurricane-wind portion of the policy.
Wall Street Instructors’ continuing education course “Effective Hurricane Mitigation” details the types of construction techniques that existing homeowners can take to make their property more wind-resistant. That course explores the terminology used by inspectors and insurers on the Uniform Mitigation Form. This information is helpful for agents wishing to assist their clients in developing a cost-effective checklist of improvements that will reduce on their premium payments. Click here for more details.