- Hurricane Helene's epic damage not expected to destabilize the state's insurance industry because most not insured for storm surge.
- Storm surge was considered the most damaging factor in the state's most recent monster hurricane.
Even if Hurricane Helene shattered previous storm surge records from Tampa to the Panhandle, the storm is not going to break — or even stress — the state’s shaky homeowner insurance industry, according to initial industry assessments.
Helene made landfall in the Big Bend area as a Category 4 storm, the same classification Hurricane Ian had when it came roaring ashore in Southwest Florida two years ago. Still, this latest catastrophe’s insured losses are expected to be a fraction of the earlier monster storm that ravaged the Fort Myers area in 2022.
The reasons are that Helene decimated a rural and far less populated area and that much of the property damage resulting from storm surge is not insured, industry observers say.
Ian’s insured losses were last reported in April at $21 billion, according to the state’s Office of Insurance Regulation. That storm’s landing on Florida’s southwest coast accelerated a flood of bad news for the state’s property insurers, with more and more companies closing Florida operations or becoming insolvent.
And the roster of property owners getting coverage from the state’s insurer of last resort, also the state’s largest property insurer, Citizens Property Insurance Corp.,grew even more after Ian. It's long been a goal to reduce the number insured through Citizens.
The crisis fueled special legislative sessions that reduced the incentives for people to sue their insurer when a dispute about the insurance settlement arose. Many are closely watching how those tort reforms to the legal system are working. And the drop in lawsuits against insurers and increase in companies willing to set up shop in Florida over the last year has been roundly cheered by those advancing those tort reforms.
Consumer advocates, however, were not so thrilled. They say policyholders are more likely to get stiffed by insurers on claim payments when they seek a fair resolution through the courts after suffering catastrophic losses; legal fees are not a guaranteed part of the settlement as they used to be.
Storms' landing location key element in loss
Hurricane Helene's property losses in Florida are expected to be in the billions, but in the single digits compared to the aforementioned $21 billion from Ian, according to estimates from the reinsurance market. Reinsurance is how insurance companies buy the financial backing to protect them from being wiped out in the event of an overwhelming number of claims from their policyholders.
CoreLogic, a company that provides data and analytics for an array of industries, put Helene’s estimated insured losses in Florida and Georgia between $3 and $5 billion, not counting losses to the National Flood Insurance Program (NFIP), which don't affect the private market. CoreLogic is still working on what insured losses may come from the epic flooding that’s hit Tennessee and North Carolina, a spokesperson said.
Also minimizing storm losses is the fact that Helene’s havoc up and down Florida's Gulf Coast was mostly concentrated in an area with little development, unlike Ian.
“Based on the landfall of Helene occurring in a sparse area of Florida’s Big Bend, we expect this will be a very manageable event for Florida residential insurers,” said Mark Friedlander, director of communications for the industry-funded Insurance Information Institute.
Friedlander's sentiments concur with Citizens' experience so far, according to a spokesperson for the the state-backed nonprofit.
Four days since Helene's midnight arrival, Citizens has received 10,000 claims, and those are not likely to trigger the assessment on all Citizens' policyholders or Florida insurance policyholders that occurs when Citizens is faced with a catastrophe that drains its reserves, spokesperson Michael Peltier said.
Such an assessment was triggered after the string of hurricanes that hit the state in 2004 and 2005, for example.
"We're in a strong financial position," Peltier said. "This will not result in any kind of assessment to our policy holders or other Florida insurance consumers."
National Weather Service data that The Washington Post analyzed shows that Hurricane Helene broke storm surge records by more than two feet in six places where water meets the land: Cedar Key, East Bay, Old Port Tampa, Clearwater, St. Petersburg and Port Manatee.
As bad as it looked on news and social media images and videos, the typical property insurance policy does not cover this sort of damage. It will likely fall to flood insurance to fix it — if the property owner is among the minority that has flood insurance.
From the sky or the ground? Source of water determines coverage
Storm surge is not covered unless the property owner has flood insurance, which accounts for about one in five of the state's property owners, according to state statistics.
“Most of the damage incurred in the Tampa Bay region and other areas of Florida’s Gulf Coast, from Naples to the Big Bend, is from storm surge and flooding versus wind damage,” Friedlander said.
In Collier County, for example, where Hurricane Ian brought widespread flooding, there are about 100,000 national flood insurance policies in place, compared to the county’s 355,167 parcels.
Also, much of the damage in the areas Helene hit hardest was not insured at all, Friedlander said.
The Padgett family in Steinhatchee is among those who had decided to go without flood or wind insurance. Storms had flooded their home, built in 1937, four times, but this was the first time one had knocked it off its moorings — causing it to drift hundreds of yards into the woodlands by their property.
Its location in a neighborhood next to the Steinhatchee River made the insurance unaffordable, said Lynn Padgett, 48, who’s lived most of her life in the house that appeared to be a total loss.
“We researched it, and it was just too much,” said Padgett, who works managing a Jiffy convenience store that flooded out in the storm.
Her husband recently retired from his log-hauling job.
'A painful education'
For those who have a standard homeowners’ insurance policy, attorney Harold Levy expects he’ll be explaining the intricacies of what water damage in a storm is excluded in a standard policy — and what’s included.
“No matter how many times this happens, you still have a large percentage of people who don't understand the distinction between your homeowners insurance and a flood insurance policy,” said Levy, a partner in the HL Law Group in Fort Lauderdale.
Even if they happen in a hurricane, storm surges are considered an intrusion of water from the ground, a circumstance that flood insurance covers, not wind insurance. A standard homeowner policy would cover water damage if the deluge came in through a hurricane-created opening or if a tree falling on the house created the opening for the water.
“Unfortunately, it’s a painful education for many people, but there’s always an education,” Levy said.
Anne Geggis is the insurance reporter atThe Palm Beach Post, part of the USA TODAY Florida Network.You can reach her atageggis@gannett.com.Help support our journalism. Subscribe today.
