When a hurricane passed near Fort Myers, the owner of a two-story professional building found that the storm was only the first problem. The roof membrane peeled back at one corner, rain came into four tenant suites, and two tenants could not open for six weeks. The windstorm deductible on his policy was a percentage of the building’s value, and the amount came as a surprise.
For Florida office building owners, hurricane coverage is the most expensive and most complicated part of the insurance program. Here is how it fits together.
Windstorm Coverage and Deductibles
Windstorm is either included in the property policy or placed separately on a wind-only policy, depending on the building’s location and the carriers willing to write it. Hurricane deductibles on commercial property in Florida are usually a percentage of the insured value, commonly between two and five percent and sometimes higher on the coast. On a building insured for several million dollars, that deductible can be large, so owners should know the number before the season starts.
Roofs, Windows and Openings
Most hurricane damage starts at the roof or the openings. Once wind breaks a window or lifts roofing, rain follows. Interior water damage is generally covered when it enters through an opening the storm created. Impact-rated windows, opening protection and a well-maintained roof reduce both the chance of a loss and the cost of coverage. See our article on roof insurance problems for office buildings.
Rental Income After a Storm
After a major storm, contractors and materials are in short supply, and repairs take longer than owners expect. Rental income coverage pays lost rent while the building is restored, and an extended period of indemnity can continue paying while tenants return. Coverage for losses caused by a civil authority order or loss of utilities can also matter after a hurricane.
Flood Is Separate
Storm surge and flooding are excluded from both standard and wind-only policies. A separate flood policy, either through the federal program or a private flood carrier, covers the building and its contents. Ground-floor suites, lobbies and building systems are most exposed. See our article on flood insurance for office buildings and our page on commercial flood insurance.
Tenant Improvements and Tenant Property
Leases decide who insures tenant improvements and betterments. Tenants should carry their own property coverage for their contents and the improvements they paid for, along with business income for their own operations. Owners should require proof.
Before the Season
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Confirm the windstorm deductible and how it is calculated
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Update the building valuation to current construction costs
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Get a current wind mitigation inspection
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Review rental income limits and the period of indemnity
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Confirm flood coverage for the building and ground-floor contents
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Collect current certificates from tenants
For more on hurricane coverage, see our page on commercial hurricane insurance, and for the complete picture, our page on office building insurance in Florida.
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Miami: 305-969-8776
Orlando: 407-993-2331
This article is general information and is not legal advice. Coverage depends on the terms of each policy.
