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This Week in Insurance: Oct. 31–Nov. 4, 2016

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Thursday, November 3, 2016

  • DFS Rule Hearing, Insurance Agent Penalties (Rule 69B-196.023), 10:00 a.m., Tallahassee. 

This Week in Insurance: Oct. 24–28, 2016

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Tuesday, October 25, 2016

This Week in Insurance: Oct. 17–21, 2016

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Wednesday, October 19, 2016

Interest-free, emergency bridge loans available

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In an effort to speed up the recovery process for small businesses economically and/or physically impacted by Hurricane Matthew, Gov. Rick Scott has activated the Florida Small Business Emergency Bridge Loan Program.

 Under the program, short-term, interest-free "bridge" loans up to $25,000 are available to small business owners located in all 67 counties in Florida.

 These loans are designed to help impacted small business owners meet immediate financial obligations until long-term financial recovery resources are secured, such as sufficient profits from a revived business, receipt of payments on insurance claims or federal disaster assistance

Owners of small businesses with two (2) to 100 employees located in the designated counties may apply for $1,000 to $25,000.  Loans are granted in terms of 90 or 180 days and are interest-free for that time period.

To be eligible for bridge loan, a business must have been established prior to Oct. 3, 2016, and demonstrate economic injury and/or physical damage as a result of Hurricane Matthew. 

Applications may be downloaded at Complete eligibility and loan development details as well as additional resources may also be found on the website.

Applications will be accepted through Nov. 11, 2016.

Following Hurricane Matthew, Report Losses Quickly and Protect Yourself from Potentially Unlicensed Individuals

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TALLAHASSEE, Fla. – Following the landfall of Hurricane Matthew, many Floridians are now beginning the process of notifying their insurance carrier of damaged property and items and taking steps to make temporary repairs to prevent additional damage. CFO Jeff Atwater, Insurance Commissioner David Altmaier, and Insurance Consumer Advocate Sha’Ron James encourage Floridians to be prompt in notifying their insurance companies and cautious of repair deals that sound too good to be true.

They offer the following information to consumers who are navigating the insurance claims process:

  • Notify your insurance company first. Many insurance companies have reporting deadlines, so it is important to act quickly. Take steps to make temporary repairs that prevent further damage, but remain in contact with your insurance company regarding any outside vendors that are brought in to make repairs. If you need help locating contact information for your insurance company, click here to access the Office of Insurance Regulation’s directory.
  • While making temporary repairs, obtain the licensing or training credentials of all third-party vendors before signing any work agreements. Beware of fly-by-night repair companies and hire only licensed and reputable vendors. Use the Department of Business and Professional Regulation’s Contractor License lookup to make sure all contractors are properly licensed and bonded. Access DBPR’s licensee search here.
  • Fully review all documentation you are asked to sign and ask questions to make sure you understand the agreements you are signing. Ask specifically who is responsible for paying the vendor, you as the consumer, or your insurance company.
  • If considering the assistance of a public insurance adjuster, ask for identification to verify that the adjuster is licensed. To verify the license of any Florida insurance agent or adjuster, use the Department of Financial Service’s licensee search here.
  • Understand how much a public insurance adjuster charges as well as what services are included before signing any contract.
  • If you suspect fraud or suspicious activity, call the Department of Financial Services, Division of Consumer Services Insurance Consumer Helpline immediately at 1-877-693-5236. Your concerns will be promptly referred to insurance fraud investigators.

Consumers who have questions about their insurance coverage are encouraged to call CFO Atwater’s Department of Financial Services, Division of Consumer Services Insurance Consumer Helpline at 1-877-693-5236. Insurance experts will be available on Saturday, October 8, and Sunday, October 9, starting at 8:00 a.m. EST to answer consumer questions and to aid consumers with filing insurance claims. This helpline can also help consumers to gain contact information for their insurance company, and can also help to verify the license of an insurance agent or adjuster.

Hurricane Deductibles 101

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While there is an exception to almost every rule, the “general rule” is that Florida residential insurance policies (that would include homes, residential condominium associations, homeowners associations, and residential apartments) have a separate deductible that applies to losses occurring during a hurricane. Therefore, most residential policies have an “all other peril” (AOP) deductible for losses caused by perils such as fire, lightening, and theft, and a separate deductible for hurricane losses. The hurricane deductible is mandated by Florida statutes.

The hurricane deductible is expressed as a percentage, typically two percent, but higher percentages are available. The percentage is a percentage of the coverage amount, not a percentage of the loss. For example, a structure insured for $400,000 with a two-percent deductible would have a deductible of $8,000 for damage caused by a hurricane.

The hurricane deductible applies only for a hurricane as defined in the statutes. According to Florida Statute 627.4025, a hurricane means a storm system that has been declared a “hurricane” by the National Hurricane Center of the National Weather Service. Note that a named tropical storm does not trigger the hurricane deductible.

According to the statutes, the duration of a hurricane in which the hurricane deductible would apply includes the time period:

  • Beginning at the time a hurricane watch or warning is issued for any part of Florida by the National Hurricane Center.
  • Continuing for the time period during which the hurricane conditions exist anywhere in Florida; and
  • Ending 72 hours following the termination of the last hurricane watch or hurricane warning issued for any part of Florida by the National Hurricane Center. 

To summarize, to trigger the hurricane deductible there must first be a named hurricane. Then, a hurricane watch or warning must be issued for any part of Florida. There have been situations when these conditions did not exist and some carriers incorrectly applied a hurricane deductible. For example, in 2013, Tropical Storm Karen formed October 3. Simultaneous with the National Hurricane Center naming Karen as a tropical storm, the center issued a hurricane watch and warning for parts of Florida, anticipating that Karen would likely become a hurricane. Karen was never declared to be a hurricane. As such, wind damage caused by Karen was not subject to the hurricane deductible; the AOP deductible applied instead.

The deductible applies on a calendar-year basis. (For commercial residential policies such as a condominium association policy, the customer can select either a hurricane deductible on a calendar-year basis or a hurricane deductible that applies to each hurricane.) Using the earlier example of the $8,000 hurricane deductible, that $8,000 applies for all losses during the calendar year for losses due to hurricanes.

For example, in 2004 some areas of Florida were hit by three major hurricanes in about 40 days. This calendar year deductible applies only if the customer was insured by the same company (or group of companies if an insurer has multiple companies) during all hurricanes. Assume that a hurricane causes $40,000 in damage; the claim is paid less the $8,000 deductible. If there is a second hurricane during the calendar year, the $8,000 hurricane deductible does not apply; instead the AOP deductible applies.

In a different example, suppose that the first hurricane causes damage of only $3,000. Due to the $8,000 deductible, nothing is paid. If a second hurricane were to cause $35,000 in damage, the claim is paid less a $5,000 deductible ($8,000 hurricane deductible less the $3,000 that applied for the first hurricane, leaving $5,000 deductible). If a third hurricane were to cause damage in the same calendar year, the AOP deductible would apply. Many, if not most, insurance policies require that the customer report all hurricane losses, even those that are clearly below the deductible. Failing to do so could result in the full application of the hurricane deductible for second and subsequent hurricane claims.

There are other key points to keep in mind:

  • Policies are different; it’s key to read the specific policy in question to see how deductibles are structured.
  • The statute dealing with hurricane deductibles applies only to “admitted” insurers; it does not apply to surplus lines insurers. While surplus lines insurers typically also use a hurricane deductible, they are not required to do so.
  • Wind damage that is not associated with a hurricane (such as a tornado or summer thunderstorm) is not subject to a hurricane deductible. An insurance company may, however, issue a policy with a separate “windstorm” deductible that would apply to wind losses not due to a hurricane as long as the deductible was approved by the Florida Office of Insurance Regulation.
  • Hurricane deductibles on policies typically can only be changed at the renewal date of the policy.
  • Commercial non-residential policies (for example policies covering a hotel or office building) are not required by the statutes to have a separate hurricane deductible. If an insured desired to use a hurricane deductible for these type of structures, she would be free to do so as long as it was approved by the Florida Office of Insurance Regulation.
  • Florida Statute 627.701 contains the information on deductibles; F.S. 627.4025 defines "hurricane" and "hurricane coverage."

This Week in Insurance: Oct. 10–14, 2016

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Tuesday, October 11, 2016

  • Florida Workers’ Compensation JUA, Producer Appeals Committee meeting, 2:00 p.m .(ET), Tampa Airport Marriott, Tampa International Airport. 

Independent insurance agents deployed to help Florida homeowners navigate claims from Hurricane Matthew

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FAIA will host a media conference call about consumer issues related to Hurricane Matthew on Monday at 10:00 a.m. 

TALLAHASSEE, Fla.—In the aftermath of Florida’s first significant hurricane hit in more than a decade, Florida’s independent insurance agents are working to make sure residents understand what their insurance policy does—and does not—cover, and to help them navigate the claims process.

Independent agents are ready to serve consumers by helping them understand their rights and responsibilities given the sometimes-technical language of insurance policies and the peculiarities of hurricane coverage. One likely point of confusion for many homeowners is the reality of hurricane deductibles, which can require policyholders to pay a higher share of repair costs for damage specifically associated with a hurricane. In addition, certain types of hurricane-related damage may not be covered by most insurance policies.

“Agents will be available, even if it means they have to sit outside their offices in lawn chairs to take claims for the next several days,” said Jeff Grady, President and CEO of the Florida Association of Insurance Agents (FAIA). “Independent agents are in an ideal position to understand the challenges posed by Matthew in communities up and down our state. They’re on the ground assisting people most directly affected, and their insights can help not just affected homeowners but also government responders and insurance companies.”

Here are the top five things policyholders need to understand about insurance and hurricanes:

  1. Hurricane deductibles: Most homeowners’ insurance policies contain specific provisions related to damage caused by hurricanes, and a key feature is often higher deductibles for losses resulting from a hurricane. Under this provision, homeowners are responsible for paying a percentage of the insured value of the home, generally ranging from 2-10 percent. So for a home insured for $100,000 with a 2-percent hurricane deductible, the policyholder would be responsible to pay out of pocket for the first $2,000 in damages.
  2. Wind-driven rain: Damage caused by wind-driven rain – for example, rain blown through poorly sealed door/window openings—is not covered in most instances. While damage caused by wind itself is likely covered (subject to the hurricane deductible), water damage caused by rain seeping into the home through doors/windows generally is not.
  3. Repair scams: Homeowners should resist the temptation to sign up with the first repair crew that shows up at their door, and especially should not sign paperwork that assigns the rights and benefits of their insurance policy to someone else. Assignment of benefits scams are a leading cause of rising insurance rates, and fraud artists see a hurricane aftermath as a golden opportunity to prey on unsuspecting homeowners. Insurance policyholders should always call their agent or their insurance company first, to report a loss and determine the best way to proceed.
  4. Flood damage: Damage caused by flooding, common in a hurricane, is not covered by standard homeowners insurance policies. A separate flood insurance policy is required for this type of loss.
  5. Mitigate and document: Homeowners are expected to mitigate damage to their home to the extent they safely can, and to document their damage. So, putting a tarp over a damaged roof or boarding up a broken window can prevent further losses. Homeowners should document damage by taking photographs and save receipts for any out-of-pocket costs.


FAIA President Jeff Grady and several independent agents who are on the ground in hurricane-affected areas will provide a media briefing about Hurricane Matthew-related insurance issues. Details for the conference call:

  • Monday, October 10 at 10:00 a.m. EST
  • Conference Line: (408) 650-3123
  • Access Code: 841-852-333

Hurricane Deductible Q&A

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Q. What exactly is a hurricane deductible?
A. A hurricane deductible will appear on property policies covering dwellings and commercial residential buildings such as condominiums and apartment houses. It applies only in the event of a named hurricane, which is statutorily defined by F.S. 627.4025 as "... a storm system that has been declared to be a hurricane by the National Hurricane Center..."  

Q. If a severe summer thunderstorm caused wind damage would that claim be subject to the hurricane deductible?
A. No. Since it's not a named hurricane it would be an "all-other-peril" deductible.

Q. Is the hurricane deductible mandatory?
A. Yes, for residential (both personal and commercial) risks it is. Every residential risk will have as a minimum two deductibles—"all-other-peril" and "hurricane."

Q. Can a company have simply an "all-other-peril" deductible and a "windstorm or hail" deductible?
A. No. There must be a "hurricane" deductible for all personal and commercial residential risks.

Q. Does this hurricane deductible statute apply to surplus lines?
A. No, it applies only to admitted carriers.

Q. What is the amount of the hurricane deductible?
A. It varies according to whether the risk is commercial residential or dwelling, and also varies according to the value of the dwelling.

Q. What is the deductible required on commercial residential risks?
A. The lowest allowable is $500 and the company may require up to 3% of the policy limits. However, if the company uses a 3% deductible it may also offer the insured a 10% deductible. The company may not require the client to take a 10% deductible, it’s just permissible to offer these deductibles.

Q. What is the hurricane deductible for personal lines residential risks?
A. It varies according to the limits of dwelling coverage. There are minimums and maximums allowed:













$500,001 and up



Q. What about mobile homes?
A. If there is a lien the maximum allowed is 5%. Without a lien the maximum allowed is 10%. There is no requirement to offer either the 2% or the $500 flat deductibles on mobile home risks.

Q. Where can I find information about these deductibles?
A. Florida Statute 627.701 contains the information on deductibles. F.S. 627.4025 defines "hurricane" and "hurricane coverage."

Last minute pre-hurricane agency preparation tips

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DisasterNewsHere are some quick tips developed after the 2004-2005 hurricane season by FAIA member agents who lived through it. Visit FAIA's Disaster Command Post for access to the online Agency Catastrophe Guide, a list of Catastrophe Task Force zone coordinators, and more.


  1. Gather your staff and go over this list of questions to ask before leaving the office. (Hint: the answer to all should be yes!)
  2. Post toll-free claims numbers for all your carriers on your website and social media pages.
  3. Make sure you have plenty of printed ACORD Notice of Loss forms on hand. Also download and print copies of FAIA's Agent's Memo of Loss form. Use of a standard memo of loss is important during the heavy workload and confusion following a big storm—especially if your agency management system is down and you don’t have access to your customer’s file. The Memo of Loss form can be filled out by agency personnel not used to handling claims to expedite the process until the insureds file can be retrieved.
  4. Help your customers understand what comes next after a claim. FAIA has several sample letters to facilitate this process.
  5. Join Disaster Command Postings in FAIA's online community to follow the storm and its aftermath. And (or) join the list of volunteers on standby to help agencies affected by Hurricane Matthew.

This Week in Insurance: Oct. 3–7, 2016

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Tuesday, October 4, 2016