Happy Hurricane Season! Said no one ever.

 

According to the NOAA (National Oceanic and Atmospheric Administration), there are twelve to seventeen anticipated named storms during the 2023 Hurricane Season, which runs from June 1st through November 30th. Five to nine of those are expected to be hurricanes, with one to four being major hurricanes (Category 3 or higher). Once a storm is named, insurance companies can and will suspend binding coverage as the storm approaches and will continue to suspend coverage following a storm hitting land.

The suspension of coverage can affect home buyers who don’t get coverage early. Without adequate home insurance, closing dates can be pushed back until companies end the suspension. Use these tips throughout storm season to prevent delays for you and your home buyers:

  1. Encourage buyers to purchase their coverage early. There is no reason to not start the insurance process as soon as possible. This is important any time of year with the current state of property insurance in Florida but especially during hurricane season.
  2. Connect the mortgage company and insurance agent early in the process. Most buyers rely heavily on whatever their mortgage company requires and what their insurance advisor recommends so making the connection between those two parts of the transaction early on is sure to help things run smoothly.
  3. If a storm is approaching and insurance is not in place, encourage your buyer to call an insurance advisor as soon as possible. The policy must be bound with an effective date to avoid being held up by the binding suspension. Just because they’ve received a quote, does not mean it can’t be suspended.

We can’t stress enough, more so than ever before with the state of our insurance and reinsurance markets, to start the process early. Please share this information with your clients and let us know if we can help in any way. Let’s all hope for an uneventful season but were here if you need us.

Are Airbnb’s insurable? What should you consider before investing in one?

 

Up until just a few years ago, traveling meant making plans well in advance, booking through travel agents, and lots of planning ahead for hotels or other accommodations to explore desired locations. But with the internet at our fingertips and services like Airbnb, VRBO, etc now¬¶ it’s easier than ever to find a place to crash. Some, especially in the real estate industry, may even explore purchasing a property as an Airbnb as a long-term investment or for supplemental income. There are a few important things to consider though.

Regular home insurance policies are intended to protect you and your family from everyday risks, not from commercial renting. If a renter occupies your home for even a short amount of time, you and your family will be exposed to significantly different risks that weren’t considered when your policy was initially obtained. As a result, most homeowners and renters policies wont cover property damage that’s caused by Airbnb guests.

There are also issues that come with rentals being vacant from time to time, in which insurance carriers are not comfortable taking on. For example: If you have a property that doesn’t get rented for two weeks and a toilet overflows, no one is aware before the damage is much worse and couldve been prevented or mitigated sooner.

There are also liability concerns with different short-term renters coming in and out.

If you’re considering renting through Airbnb, your first step should be to contact your insurance advisor to review your current homeowners or renters insurance policy. While that policy may allow you to rent your property to a guest, it’s important to keep in mind that each insurer has its own restrictions and requirements. Some insurers may require advanced notice of any short-term rental, whereas others might insist that you purchase an endorsement to expand your coverage appropriately.

If you plan to rent your property out on a regular basis, many insurance companies will consider this commercial use. In many cases, regular Airbnb hosts will need to obtain a commercial insurance policy in order to be adequately insured. However, a growing number of insurance companies are now offering home-sharing liability insurance policies that can be purchased on a month-to-month basis, so this is also something to consider.

Lastly, there are Host Guarantee and Host Protection policies offered by Airbnb in particular but we would advise you to beware of coverage gaps and exclusions with these options. You can look into the details of these offerings on their website here. As always, we are happy to help navigate through this process anytime you or your clients are considering it.

 

Will the property insurance crisis in Florida really get worse before it gets better?

 

The cost of reinsurance for Florida property insurers has increased over 100% in the past 4 years. It is projected that reinsurance will go up another 50% at the time of renewal on June 1st.

If you’re wondering what reinsurance is It’s essentially insurance for insurers. It transfers risk to another company to reduce the likelihood of large payouts for a claim. It’s an extra layer of protection that allows insurers to remain solvent by recovering all or part of a payout.

This system worked great for a while, but now those reinsurance companies are much less interested in the potential risk that Florida property brings. Just in the past 6 years, over $807 billion (with a B) has been paid out in weather related disasters. So, as you can imagine, those reinsurers’ risk appetite for our beautiful state has diminished. The impact of that fallout will be different for each carrier, but significant rate increases are still expected.

From an insurance perspective, we had a rough year in 2022. Rates were at an all-time high, underwriting guidelines were more strict than ever, carriers were going out of business, and our home state was hit with some strong storms causing lots of damage.

Unfortunately for all of us, the reality is that yes it may get worse before it gets better. We expect this summer, typically the busiest time of year for real estate, to be tough when it comes to home insurance being attainable and affordable. We’ve weathered some major storms, quite literally, in the insurance industry before and well… this too shall pass. We also had two different reform bills passed last year giving us hope for change that will benefit all Florida residents moving forward. And it isn’t like we have a choice to avoid it since it’s still likely a required piece of home buying/selling transactions.

The good news is that we are in this together. We want to help get to closing and for all homeowners to feel confident that they’re adequately protected. Our biggest piece of advice to anyone looking to purchase a home is to START THE PROCESS EARLY when it comes to insurance!

 

New requirement for Citizens flood insurance effective 4/1/23


Citizens Insurance is a Florida-based state-run carrier insuring residential and business properties all over the state. They used to be considered the insurer of last resort in Florida but have taken on more home policies than ever in the recent past so this news will be very impactful to many.
A new bill recently took effect that outlines some important changes regarding the requirement of flood insurance on Citizens home insurance policies. It states that Citizens personal lines residential policyholders must secure and maintain flood insurance that meets certain guidelines in order to be eligible for Citizens coverage at all.
The bill provides the following timetable for which flood insurance coverage must be implemented for personal lines residential Citizens policyholders:
  • For risks located in areas designated by the Federal Emergency Management Agency as special flood hazard areas, flood insurance must be secured for new Citizens policies with an effective date on or after April 1, 2023, and at renewal for Citizens policies that renew on or after July 1, 2023.
  • For all other risks, regardless of flood zone, the requirement to obtain flood insurance at policy issuance or renewal is effective:
  • March 1, 2024: policies insuring property for $600,000 or more
  • March 1, 2025: policies insuring property for $500,000 or more
  • March 1, 2026: policies insuring property for $400,000 or more
  • March 1, 2027: all other policies

 

This comes as a big change for Citizens policy holders that may not currently have flood insurance. For additional information or resources on flood insurance, please reach out to us anytime.

5 Major Changes to Home Insurance in 5 Years


Home insurance is an ever-changing topic of conversation – sometimes positive and sometimes not so much. The last five years and the next five years to come have been and will be HUGE to the property insurance industry, thus impacting real estate drastically. Here is a recap of what we’ve seen and what we expect.

THE PAST FIVE YEARS:

  • Litigation and fraud increased more than ever before, driving premiums up and causing at least 10 companies to go out of business or stop writing in Florida
  • Underwriting guidelines became the most strict we’ve ever witnessed… roofs have to be as new as 7 years old with some companies and risks are scrutinized with extra inspections and requirements
  • It is estimated that since 2017, the four storms that hit Florida (Irma, Michael, Ian and Nicole) cost over $160 billion with a net loss for Florida property insurers of $3 billion… causing insurance carriers to be unprofitable and reinsurers to question their risk appetite
  • Homeowners are seeing rate increases of over 50%
  • Policies, because they’re hard to come by, may be lacking coverage from what is typically recommended

THE NEXT FIVE YEARS:

  • Citizens is no longer the “insurer of last resort†and is writing more business than ever, but will soon be requiring flood insurance on all policies, regardless of flood zone risk level
  • The process of Assignment of Benefits (AOB) is no longer allowed for contractors to obtain rights to manage claims for the insured via a signed form
  • One-way attorney fees are no longer permitted so the astronomical payouts from insurers will diminish significantly
  • Two reinsurance funds were created in special session in 2022, which will help carriers still take on exposure
  • We expect in the next 2-3 years, premiums will begin to level out and come down some… although rates will remain competitive since there aren’t as many carrier options, our hope is that they come down a reasonable amount

It’s been a while since there was “good†news in the property insurance world but all of these are steps in the right direction that we can all be excited about. The end goal is to make insurance available and affordable for all Florida homeowners again.