Weathering insurance in hurricane prone states

It’s been about a month since the one-two punch from Helene and then Hurricane Milton in Florida. And hurricane victims, even those with insurance, are facing a challenging recovery.

The insurance industry is categorizing Hurricane Helene as an almost entirely flood-driven event. While Milton was both a wind and rain event. Experts say property owners who lacked flood insurance may not be protected from water damage from Milton either, thanks to the way many insurance policies are written these days.

Data from the insurance comparison website Insurify shows that homeowners in some hurricane-prone states already face the highest home insurance rates in the country. Astronomical costs from hurricane damage claims contribute to Florida’s average home insurance rate of nearly $11,000 a year. Louisiana, the second-most expensive state, has an average annual rate near $6,500, according to Insurify. And in South Carolina, the average annual rate is roughly $3,500 a year.

Digital meteorologist Leslie Hudson has more on the building insurance crisis in these hurricane prone states.

Post-disaster insurance fraud also drives rate increases, especially in Florida. According to the National Insurance Crime Bureau (NICB) in 2023, U.S. insurers paid more than $92 billion dollars in catastrophe losses, with upwards of 10%, or $9.2 billion dollars, lost to post-disaster fraud. This can add hundreds of dollars to a homeowner’s annual premium. Roof replacement schemes have also significantly contributed to the underwriting losses for insurers, according to the Insurance Information Institute.

Insurance experts predict that the Federal Emergency Management Agency (FEMA) will implement rate hikes in the coming years to tackle the financial deficit of the federal flood insurance program. While FEMA is limited to increasing rates by 18% annually, the cumulative impact over time could be substantial.

Despite the challenges, there are some consumers tips when insurance shopping:

1. Research highly-rated insurers before buying a policy
2. Be careful with wording when submitting a claim
3. Have an independent agent investigate your denial
4. Seek legal recourse — but be aware that it may be more difficult than before

How much will flood insurance cost you?

Insurance may be less expensive in areas where flooding has generally been less likely, That’s not to say these regions are flood-proof, though. The National Flood Insurance Program estimates that more than 40% of flood insurance claims come from outside high-risk flood zones.

The average cost of a policy is $1,000 a year. Residents of low-risk areas can buy a policy for between $480 and $600 a year, according to insurance trade groups.

It’s also important to remember there is a waiting period for flood insurance. In other words, you can’t beat the system by buying flood insurance right before a storm. The process of settling insurance claims can be lengthy too, and policyholders often receive much less compensation than what they may have expected from their insurer after a flood hits.