Hurricane Hogwash: 5 Common Myths Debunked
|Far too often insureds base their wind risk management strategies on incorrect assumptions. Now is a good time to start discussions and debunk false wind myths, while there is still sufficient time to review and revise risk strategies. Here are 5 common misconceptions that must be addressed with insureds:|
Myth 1: Hurricanes will only happen between June 1st and November 30th.
Wrong! These dates are used as convenience to reflect the period of time when most hurricanes occur. However, storms can and will occur off-season. To date the Atlantic hurricane database has recorded sixty cyclones outside this period.
Myth 2: Inland property is safe from hurricanes.
Though wind speeds tend to decrease as storms come off the coast, concentrated rainfalls and tornadoes remain a significant danger to inland property. Flash flooding is not uncommon inland after a hurricane. Indeed, FEMA reports that over 25% of floods occur in low- and medium- risk flood zones. In response to severe and repeated inland losses, hurricane loss models including RMS 11, have been changed with increased estimates for inland damages. Do not underestimate this risk.
Myth 3: My property policy will cover all the damage from a hurricane.
Policy forms can vary and both client needs and coverage specifications can change over time. Carefully review coverage and limits with your client. Does the insurance program include business interruption and contingent business interruption? Is the policy based on replacement cost or actual cash values? Is service interruption contemplated? What about ingress and egress coverage? Does the program contemplate excess limits and DIC coverage? Which deductibles may apply? Is the deductible affordable?
Myth 4: Wait for a hurricane warning to execute your hurricane plan.
A Hurricane Warning is often preceded by a Hurricane Watch, which indicates that hurricane conditions may arise in 36 hours. A warning, however, occurs when sustained winds of 74 mph are anticipated within the next 24 hours. Don’t delay your protective measures by waiting for the warning; be sure to go through your protocols as early as possible.
Myth 5: Nobody writes cheap wind anymore. I’ll never get good coverage that I can afford.
It’s a changing market, but still a viable one for both coastal and inland properties. The key to an effective property program is finding the right carrier(s) at the right price.
Contact Us Today!
Preferred Brokerage has significant experience with wind and flood risk. We would be pleased to discuss the upcoming Hurricane season and how to best position you risk. Contact us today to learn more.