Tallahassee, Fla., Oct. 23, 2024 (GLOBE NEWSWIRE) — Floridians are still grappling with the devastation left by Hurricanes Helene and Milton and trying to rebuild their lives, homes and communities. For many, the damage feels unrelenting, and some are still building up from previous storms like Debby (2024), Idalia (2023), and Ian (2022). In the aftermath, time, resources, and a coordinated effort will be critical to a full recovery. Property insurers play a critical role in this recovery process, actively working with homeowners to assess, process and pay claims as quickly as possible.
“Unfortunately, recent media reports and self-serving statements by some critics of the insurance industry have created confusion and led consumers to believe that property insurers are unfairly denying claims,” he said Michael Carlson, President of the Personal Insurance Federation of Florida (PIFF). “The narrative created, based in part on an article citing data on damage from Hurricane Ian, misses a key issue: much of the damage caused by Ian was caused by storm surges, which are generally not covered by standard home insurance are. The result is that consumers are misled into believing that flood damage is covered and this is rejected by insurers without adequate justification.”
Reasons why a claim might close without payment
There are several valid reasons why a claim may close without payment (OIR CRF 24.01.A). One of the most common reasons is that the damage costs fall below the deductible, which is the portion of the insurance for which the homeowner is responsible. If the compensation is below the deductible, the insurer is not obliged to pay the damage. A second common reason is that the damage claimed is not covered – some insurers exclude pool cages from coverage, for example. If a homeowner files a claim for damages that is not covered by the policy, the claim will be denied and closed without payment.
There is a timely and even more important reason why a property damage claim can settle without payment: If the claim relates to damage caused by storm surge or local flooding, it is generally not covered. Many consumers do not know that home contents insurance excludes flood damage. If they file a flood damages claim, it will be appropriately rejected and the claim will be dismissed without payment.
Unfortunately, PIFF said, several recent storms – Ian, Debby, Helene and Milton – have caused significant flood damage, leading to a higher volume of claims settlements without payment. This is exacerbated by a federal requirement that must be met for a storm victim to receive emergency assistance from the Federal Emergency Management Agency (FEMA).
The Role of Claim Denials in FEMA Assistance
After severe hurricanes, FEMA provides disaster assistance to those affected. However, to be eligible, homeowners must first file a claim with their insurer, even if they know the damage was due to flooding and is not covered by their policy. The denial of the claim is necessary for FEMA to intervene and provide financial assistance. This requirement ensures that homeowners can get the help they need, but also leads to an increase in the number of claims closed without payment.
To make matters worse, Carlson explains, most homeowners do not purchase private flood insurance or National Flood Insurance Program (NFIP) insurance and are not protected from damage from storm surge and localized flooding caused by a storm. The numbers are alarming: According to NFIP data, 8 out of 10 households are not protected by flood insurance.
Insurers have a legal obligation to treat consumers fairly and comply with the terms of the insurance policy. If an insurer regularly settles claims without payment, the Office of Insurance Regulation (OIR) has the authority to conduct a market conduct audit of that company to determine whether its practices meet legal requirements. If the OIR finds that an insurer has violated Florida law, it can impose a variety of penalties, including hefty fines and even revocation of the insurer’s business license.
Look for reliable information
Carlson said PIFF urges consumers who have suffered hurricane damage to contact their agent or insurer as soon as possible, review their home and auto insurance policies and be ready for the claims process. Insurers have a legal obligation to treat consumers fairly and comply with the terms of the insurance policy. The Florida Office of Insurance Regulation enforces consumer protections, and Florida law provides grounds for legal action by a consumer if they believe their insurer has violated the law.
“The misinformation campaign about claims being settled without payment is increasing stress for homeowners trying to rebuild after recent storms,” he added Carlson. “Insurance industry critics should devote their efforts to educating consumers about the importance and value of flood insurance and providing information that supports recovery efforts.” PIFF members remain true to their role as financial first responders and stand by their commitment to helping customers to support recovery and rebuilding after a storm.”
Market health indicators
Florida continues to see signs of improving market health amid historic legislative reforms aimed at restoring competition and increasing consumer choice. These changes to improve the insurance market have been designed to apply to future claims, not past claims. It will therefore take some time for improvements in the market to have the desired effect. But there are already signs that the market is improving.
Insurance Commissioner Michael Yaworsky recently announced additional encouraging developments related to the state’s strengthening property insurance market, adding that he was “very pleased to share these announcements as they indicate continued strengthening of Florida’s property insurance market, which is contradictory to the “Narrative says.” has been making the rounds about our industry in recent months.”
For more information on the impact of reforms and market health, see PIFF’s latest Market Pulse on PIFF.net.
About PIFF:
The Personal Insurance Federation of Florida, Inc. (PIFF) is a leading voice for the personal property and casualty insurance industry in Florida. PIFF represents national insurance carriers and their affiliates, including many of the leading national providers of private automobile and homeowner multi-peril insurance. Collectively, PIFF members write more than $13 billion in premiums in the state. PIFF is committed to a healthy and competitive insurance market for the benefit of Florida consumers. Follow us @PIFFNews. Visit PIFF.net to learn more.
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Reasons why claims are closed without payment