Department of Financial Services, Consumer eViews Special Bulletin
June 21, 2010
Florida's Insurance Consumer Advocate Sean Shaw
Floridians are concerned about the effect that the Deepwater Horizon Oil Disaster is having on the state’s pristine beaches, marine life and economy. The prediction of an active hurricane season has given citizens an additional reason to be concerned.
In the aftermath of the 2004/2005 hurricanes, Florida’s homeowners learned how difficult it can be to differentiate damage caused by hurricanes from damaged caused by storm surge. Hurricane damage is typically covered by homeowner’s insurance policies, while damage caused by storm surge is covered by flood insurance. In the event an active hurricane season brings spilled oil inland, consumers may find themselves facing an additional up-hill battle. The question of who will pay for damaged property will undoubtedly arise.
Damage caused to a home by hurricane winds is covered by homeowners insurance. Damage caused by storm surge is not covered by homeowners insurance, nor will any contamination resulting from spilled oil. However, consumers should know that many homeowners’ insurance policies vary and some include pollution exclusion clauses which may prevent homeowners from receiving payment for damage caused by any oil contamination. Homeowners should check with their agent to discuss the details of their policy.
Flood insurance covers damage to the home caused directly by a storm surge, even if it is mixed with oil. Homeowners should note that coverage extends to the policy limits for both the structure and contents. Flood insurance does not cover the portion of the home that has been damaged by hurricane winds. Consumers should also know that flood insurance will not pay for the clean-up of property that has been contaminated by oil. Finally, homeowners should be aware that flood insurance has a 30-day wait period until coverage becomes effective, unless the coverage is purchased at the time of the mortgage closing.
Homeowners are encouraged to review their insurance policies and call their insurance agent if they have any questions.
Any expense related to the clean-up of oil will be billed to BP.
The Insurance Consumer Advocate is appointed by Florida Chief Financial Officer Alex Sink and is committed to finding solutions to insurance issues facing Floridians, calling attention to questionable insurance practices, promoting a viable insurance market responsive to the needs of Florida’s diverse population and assuring that rates are fair and justified.