Another storm brewing: High deductibles, insurance disputes follow Hurricane Ian

The sticker shock of insurance premiums running into the thousands of dollars and frustrations with carriers' damage and coverage estimates after Hurricane Ian are spurring a wave of Florida homeowners and small businesses to call attorneys for legal counsel and potential lawsuits.

"The problem for people is having the high deductibles," said Amy Boggs, CEO and founder of Boggs Law Group PA in St. Petersburg.

Florida homeowners' and property insurance policies include potentially high hurricane deductibles for wind damages. Windstorm deductibles apply to all hurricane-related claims in the state.

Those deductibles typically run 2%, 5% or 10% of replacement costs.

"For example, if you have $200,000 replacement cost coverage, a 5% deductible is $10,000, meaning the insurer will subtract $10,000 from the claim settlement," according to Mark Friedlander, director of corporate communications with the Insurance Information Institute — a New York-based insurance industry group.

That is resulting in storm-weary homeowners facing deductibles in the thousands of dollars.

Boggs said her law firm is receiving a significant number of calls from homeowners frustrated with Hurricane Ian responses months earlier than for past storms.

"Normally after the storms, attorneys aren't called for 90 days or more. Nobody wants to talk to an attorney Day One," Boggs said. "But we are getting so many calls already because of the very low estimates."

She's not alone.

"We're seeing a lot of underpaid claims," said Donna DeVaney Stockholm, president of the Stockholm Law Group in Tampa, adding some homeowners are becoming impatient with slow damage appraisals and payouts.

"They are taking a very a long time to get folks out there," she said.

DeVaney Stockholm said some of the disputes center on roof damage with some insurers pushing for repairs instead of replacement and others disputing the cause of storm damage.

"We see some instances where they are saying the roof can be repaired," she said.

The attorney also said residential policy holders are facing battles with insurers over lowball estimates and what caused property damage and how that is or isn't covered.

"We can send out experts to scope their damages so we can have a second set of eyes on it," she said.

DeVaney Stockholm is also seeing some businesses struggle to get payments and progress on damage repairs from their insurers.

TOUGH SITUATION

Hurricane Ian is the latest challenge to a Florida insurance situation that has seen some private insurance firms go insolvent, homeowners facing skyrocketing premiums and more property owners forced to the state-run insurer of last resort — Citizens Property Insurance Corp.

"We estimate Hurricane Ian will be the second-largest U.S. catastrophe event on record, with $60 billion in insured losses. The largest was Hurricane Katrina in 2005, which would be a $90 billion insured loss event in today's dollars," Frielander said.

He said Hurricane Nicole, which swept across Florida in November, caused another $1.2 billion to $1.3 billion in damage. Nineteen states and the District of Columbia have some sort of hurricane-related insurance deductibles.

Boggs said law firms can formally reach out to insurance carriers on behalf of residential and commercial clients with notifications of potential legal action. That will sometimes help resolve conflicts and move the process along, she said.

"They just want their house fixed or the small business owner wants their business back," she said.

DeVaney Stockholm said policyholders have potential legal legs for their complaints if insurance companies changed their policies without their knowledge or approvals.

Otherwise, the disputes center on getting insurance companies to move more quickly and to live up to policies' coverage, DeVaney Stockholm said.

"Florida is a buyer beware state. You bought the product. That is what the product is," she said.

Frielander said homeowners without flood insurance are a major challenge with the storm's surges and epic rains causing damage from the southwestern coast to Orlando and Volusia County.

He said 30% to 40% of homes in coastal areas have flood coverage but "inland areas of Florida have flood insurance take-up rates of just 2% to 5%."

Those property owners can get emergency grants from the Federal Emergency Management Agency or other federal loan programs.

"However, FEMA grants are not a substitute for insurance. They typically only pay out approximately $3,000 to $6,000 per household," Frielander said.

He agrees that Florida's insurance situation is perilous. The insurance groups says Florida accounts for more than 80% of property claim lawsuits, and that 27 insurers are on the state watch lists for their financial health.

That was preceded by six residential insurers going insolvent in the state.

Insurance Information Institute projects hurricane litigation could cost between $10 billion and $20 billion that could drive more insurers out of business.

"Floridians already pay the highest average home insurance premium in the U.S. at $4,231, nearly three times the U.S. average of $1,544. Average year-over-year premium renewal increases across the state this year are running at 33%, compared to the U.S. average increase of 9%," Frielander said. "We expect renewal rates to run even higher next year due to the storm losses and increasing cost of reinsurance."

The insurance group said more than 633,000 claims have been filed related to Hurricane Ian and another 14,000 for Hurricane Nicole. Insurers also expect to see more than 300,000 auto insurance claims filed because of the storms.

SOARING DEDUCTIBLES

U.S. Rep. Greg Steube, R-Florida, is also hearing post-Ian frustrations from constituents hit by the storm and also points to state assistance programs for those struggling with high deductibles and insurance cots.

"My district is home to many senior citizens and those on fixed incomes. I've heard from constituents about their frustrations with Florida's insurance market. Soaring deductibles make it extremely difficult for some individuals and families to be able to afford to rebuild," Steube said in a statement. "I'm glad the State of Florida has allocated millions to assist those who cannot afford their insurance deductibles after being heavily impacted by Hurricane Ian.

"Southwest Florida has a long road ahead, but I am going to continue working hand in hand with the state and all the counties in my district to ensure recovery resources continue to be readily available."

Upcoming legislative sessions in Tallahassee will delve into the state's dilemmas with Florida Gov. Ron DeSantis and majority Republicans facing scrutiny for how friendly state polices are toward the insurance industry.

Homeowners can also report insurance carriers to the state's oversight agency, according to Samantha Bequer, communications director for the Florida Office of Insurance Regulations.

"This will assist the state in reviewing applicable information related to the claim and determining what action can be taken to assist the consumer. If needed, there are alternative dispute resolution processes available to policyholders, such as mediation and appraisal," Bequer said.

"OIR expects insurers to do everything possible to respond to the needs of impacted Floridians, restore a sense of normalcy, and facilitate restoration and recovery in impacted communities. Consumers are encouraged to work closely with their insurance company and agent if they feel they have been wrongfully denied or unfairly compensated regarding a claim. Consumers should first provide the insurer with damage estimates or additional documentation to support their claim," she said.