Hurricane season is here, and Florida is ready.
The Florida insurance industry is in great shape heading into the 2014 Atlantic hurricane season.
A Long, Welcome Pause
The Sunshine State has seen no hurricanes for the past eight years. Add that to the fact that it's a seller's market in catastrophe bonds and the state is financially prepared handle the costs associated with a hurricane that makes landfall this year.
"Florida is in its best position in a decade," says Robert Hartwig, president of the Insurance Information Institute.
Even better news for Florida, it's is expected that the El Niño weather pattern will keep the number of hurricanes below average.
Forecasters caution, though, that it only takes one major storm to make landfall and cause catastrophic damage.
Florida hasn't seen a hurricane in eight years.
Real Estate Development
There is also a significant amount of real estate development in Florida near coastal waters. That will add to the costs associated with a hurricane strike.
"The reality is, on balance, the state is in a worse position in terms of sensible decisions about building and putting things in harm's way in the coastal area," says Charles Lee, director of advocacy for the Florida Audubon Society.
That's why groups such as Smartersafer.org, a national coalition of fiscal conservatives, housing organizations, environmentalists, and insurers, has recently issued a warning about high-risk development.
"Simply rebuilding isn't enough. We need to start approaching disasters with a focus on preventing losses rather than simply trying to recover from them," says Jimi Grande, a member of the coalition.
A Unique Risk
Florida carries a unique risk because it's situated in a peninsula configuration among warm waters where the Caribbean meets the Atlantic. Warm water is one of the key ingredients for hurricane development and sustainability.
Hurricane Wilma was the last hurricane to strike Florida. That was in 2005, and it marked the end of a series of five hurricanes to hit that state over a two year period.
The eight year pause in hurricane activity in the Sunshine State has enabled Florida's Hurricane Catastrophe Fund, which helps insurance companies pay claims, build its reserves to $13 billion.
Also, the state-run Citizens Property Insurance Corp., which functions basically as an insurer of last resort, will start the 2014 hurricane season with a $7.6 billion surplus.
Florida has history of facing some fierce storms during hurricane season. This year, the state is financially prepared for them.
The first day of June is almost here. For many people, that means the kids are getting out of school and summer vacation season is beginning. For others, it's a welcome sign that warmer days are coming.
It's also the beginning of the Atlantic hurricane season in the U.S.
Hurricane season, officially, lasts from June 1 through November 30. During that time, it's likely that at least a couple of Atlantic hurricanes will make landfall on the eastern seaboard in the United States.
Florida is a frequent target of hurricanes. The costliest hurricane to ever hit the U.S. was Hurricane Andrew in 1992. That Category 5 storm made landfall at Elliot Key, FL. It cut a line of damage across the entire state as it worked its way into the Gulf of Mexico.
If you own a business in Florida, you need to be prepared for hurricane season with proper insurance. Otherwise, you could lose your business entirely.
Commercial property insurance is available to you if you operate out of a commercial building. Typically, a commercial property insurance policy will cover loss that's a result of theft, fire, smoke, vandalism, and, most importantly, wind.
The specific property covered will be named in the policy. Usually, though, it covers buildings, documents, and equipment. The really good news is that some property insurance policies also cover loss of income caused by business interruption. So, if your business is unable to operate for several days (or weeks) after the hurricane, you'll receive compensation for that down time from the insurance company.
Hurricanes are not only known for powerful winds, they're also known for dumping a lot of rain on the ground. Rains can cause flooding, especially in areas near the ocean or a river.
If your business is located in an area that has the potential for a post-hurricane flood, you might need flood insurance in addition to your standard commercial property insurance. This is because you could experience damage that was caused by a flood, but not by wind or other hazards specifically named in the policy.
Flood insurance, like commercial property insurance, will cover you for damage caused by flooding. Typically, specific items that are covered include the building, its foundation, electrical systems, plumbing equipment, climate control equipment, kitchen equipment, carpeting, paneling, and fixtures.
It should be noted, though, that flood insurance does not cover damage caused by mold, mildew, or moisture when that damage could have been avoided with reasonable efforts of preventative maintenance. In other words, even with insurance, you're still going to want to make a good faith effort to prepare your property for the worst and limit the damage.
Hurricane season is almost here. Be certain that your Florida-based business is ready for it with proper insurance.
Pablo M Conde