The Florida Climate Change Crisis, Insurance, and Your Home

Over the past decade, Florida has become one of the most highly populated states in America. According to Florida’s Office of Economic and Demographic Research, the state grew by an estimated 329,717 new residents between April 2020 and April 2021 alone. There is no wonder why Americans are flocking to the aptly named Sunshine State; the hot climate, bordering ocean, and seemingly constant sunny days are all contributing factors. However, Florida is also one of the states most effected by climate change. Hurricanes, tornadoes, and rising sea levels are just a few environmental factors that ravish the land.

Not only does climate change pose a threat to our natural environment, but to our homes as well. A prime example of this is the devastating collapse of Champlain Towers South that occurred just last year, resulting in lawsuits of nearly $1 Billion. While investigations are still ongoing about the cause of the collapse, many experts believe climate change, and the ground the building was built on, are partially to blame.

The increased demand for housing, the threats of climate change, and the devastating collapse of Champlain Towers South have caught the attention of some insurance companies, who have begun “scrutinizing the buildings they are covering, raising rates that are already among the highest in the nation, or canceling coverage altogether,” according to the New York Times. These issues have contributed to the growing concern of some economists about whether parts of the United States are too risky to insure – and premiums have risen above levels most people can afford. The New York Times suggests that the “shift has already started. Days after the collapse, insurance companies sent letters threatening to cut off coverage to older buildings that did not pass mandatory safety inspections. In California, insurers have begun fleeing fire-prone areas; in other parts of the West, officials say they are seeing similar reports of insurers refusing to renew policies.” Buildings along the Florida coastline are also seen as high-risk for insurance companies, due to rising sea levels. According to The Guardian, “on the list of the 20 urban areas in America that will suffer the most from rising seas, Florida has five: St Petersburg, Tampa, Miami, Miami Beach and Panama City.” Recent events, such as these, leave community associations wondering what they can do to not only place insurance, but ensure their buildings are protected against a total loss.

A third-party insurance appraisal is the only way to ensure that your building and common property are properly insured to their full replacement cost value. While many insurance policies protect against extreme weather and “Acts of God,” if your property is not adequately insured and experiences a total loss, your association could face a significant deficit, resulting in major special assessments or levies to pay for the shortfall. Not having an appraisal at all may also subject your association to a co-insurance clause, where the owners will be financially liable for a percentage of the loss – typically 10-20% of the property’s replacement cost. Having an insurance appraisal in place will not only assist in obtaining favorable terms from your insurer, but it could also save owners a significant sum of money in the event of a total loss. Individual unit owners should inquire if their building has a current insurance appraisal, and if not, encourage the community association board to obtain one.

While climate change is a real and dangerous threat to Floridians, being proactive and taking the necessary steps to ensure your property is adequately protected will give you peace of mind that not only are you covered in the event of a total loss, but that you are paying the right premiums.