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After Irma: Consumers face new reality with higher storm deductibles

Floridians have filed close to half a million property insurance claims worth an estimated $3 billion in the two weeks after Hurricane Irma hit, but more than 17,000 claims already have been closed without payment, records show — and consumers like John Flynn of Lake Worth find themselves wrestling with a bigger financial burden than they hoped.

One reason: It’s the first time for many that rising hurricane deductibles are taking a big bite out of their wallets. Deductibles are what policyholders pay before insurance coverage kicks in. While grateful that Irma’s damage was not worse, Flynn said he expects to pay out of his own pocket for roof and ceiling damage that might not exceed his hurricane deductible of nearly $6,000.

His car insurer initially denied his claim of scratches and body damage from storm debris, before resolving it with a payment after The Palm Beach Post inquired.

“I’m a senior citizen living on a fixed income,” said Flynn, a retired educator and author. “I had hoped by keeping up on my insurance it wasn’t going to be wiping out my savings.”

Hurricane deductibles have climbed as Florida home insurance premiums, the highest in the nation, pushed steadily higher after hurricanes from 1992’s Andrew to the storms of 2004-5.

Such deductibles, which can range from $500 up to 10 percent of a Florida home’s value, can help consumers blunt increases in annual premiums in quiet years.

Only when a storm hits does the full effect of this cost-shifting to consumers become apparent.

After an 11-year hurricane reprieve for Florida, Hermine and Matthew did considerable damage last year but largely spared the heavily-populated southern portion of the state. Then came Irma, a Category 5 storm for longer than any on record before hitting Florida’s Keys and southwest coast and sending tornadoes, gusts and heavy rain across virtually the entire width of the state.

The big-chunk deductibles are part of what Nicole Vinson, a Tampa attorney who sues insurers and heads a group called Policyholders of Florida, has called a gradual “hollowing out” of coverage. Yet premiums seem to keep rising anyway, she said.

Now national insurers are confronting major hurricanes weeks apart in Texas and Florida, and the damages extend to more than homes. Flooding from Hurricane Harvey could affect up to 1 million vehicles in Texas according to early estimates, likely to become the most ever from a natural disaster.

Flynn’s car insurer, Geico — whose companies hold the largest market share in Florida — offered assurances Florida customers are not facing unusual denials or diffculties because of the two-storm whammy.

“Geico’s financial strength is rated A++ by AM Best,” spokeswoman Christine Tasher said. “Geico quickly mobilized its catastrophe teams to begin inspecting claims immediately after Hurricane Irma passed. At this time, Geico’s adjusters are inspecting Irma claims as they are reported and at our customers’ convenience. We continue to deliver prompt and fair settlement of all claims for our customers affected by the recent storms.”

But several Florida property insurers said they are experiencing higher costs and delays in arranging for claims adjusters, many of whom are tied up in Texas.

And Federal Emergency Management Agency officials cautioned this week that inspections of homes to qualify for federal aid — often carried out a week to 10 days after an application is approved — may now take up to a month in Florida.

Florida consumers have logged more than 3,900 calls to the state’s insurance helpline since Irma hit, though only slightly more than a couple dozen of those represent formal complaints against insurers at this early stage, according to records requested by the Post.

“We are pleased to see complaint figures low at this stage of our state’s recovery,” said Ashley Carr, spokeswoman for the state’s Department of Financial Services. “It generally will take a few weeks for consumers to file a claim and then reach a point, for any number of reasons, where a complaint may be the direction a consumer chooses to take.”

She encouraged consumers to call with questions and problems to the state’s insurance helpline at (877) 693-5236.

Statewide, more than 496,000 Irma claims had been filed as of Thursday. Less than 10 percent had been closed.

Most of those, about 428,000, involve residential properties as opposed to commercial or business policies.

About 7.2 percent of residential claims have been closed, but nearly as many have been closed without payment (15,003) as have been closed with payment (15,928), records from the Florida Office of Insurance Regulation show.

That could reflect everything from not meeting deductibles to insurers asserting property damage is caused by flooding. Most flood policies come from the federal government’s National Flood Insurance Program. Fewer than 1,000 claims have been filed on flood insurance policies issued by private companies.

In Palm Beach County, nearly 19,000 Irma claims had been filed by Thursday. Almost 13 percent of those had resolved, but 1,067 had been closed with no payment compared to 1,377 with payment.

Consumers like Flynn in Lake Worth are grappling with the new reality.

“One storm shouldn’t put us in the poorhouse,” he said.

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