Afraid Babcock Ranch insurance is going to skyrocket following Ian? Then clearly you’re an analytical Deadhead.
TL;DR
Hurricane Ian will cause homeowner and flood insurance rates to rise by 20-30% in Babcock Ranch, according to experts. Even as Florida legislators try to remedy insurance needs, there are mitigating strategies you can pursue in the Babcock Ranch community to counteract this post-Ian hike.
Babcock Ranch Insurance? Analytical Deadheads? Say What?
Let’s explore this seemingly farfetched relationship by defining the economic term causality. John Hicks, a leading economic theorist in the 20th Century, defines the principle as:
Causality, the relation between cause and effect, is thought to be the business of philosophers; economists, though they often talk about effects and sometimes (perhaps less frequently) about causes, are usually content to leave the question of the meanings of these terms to others.
It could be said that Hurricane Ian and its catastrophic effect on Southwest Florida was the cause of homeowner and flood insurance spikes in the area that we are beginning to feel now.
In plain English, the deadliest hurricane to strike Florida since 1935 caused a ripple effect.
This brings us to Grateful Dead and their 1970 classic song from the album American Beauty.
Any righteous Deadhead would likely shudder at this belabored comparison. We, however, take the opposite tact.
In this post, we take what we’re calling an “analytical Deadhead” approach to study the ripple effects of Hurricane Ian on Babcock Ranch insurance, the state’s approach to calm the markets and what you (as a Babcock resident or soon-to-be one) can do personally to counteract this causation.
The Ripple Effects of Hurricane Ian on the Florida Insurance Market
Hurricane Ian’s devastating impact led to massive losses for insurance carriers, causing many to withdraw from the Florida market.
Consequently, only a few companies, such as American Integrity, Southern Oak, Tower Hill and Millennial Specialty Insurance (MSI) continue to provide coverage in the region.
This reduction in the number of insurance providers has led to increased rates for homeowners in the Babcock Ranch community and America’s first solar-powered town.
The hurricane also caused significant changes in the reinsurance market. Reinsurers (companies that provide insurance to cashed-out insurance companies) now require primary insurance carriers to hold more of the risk.
This development further contributed to the rise in insurance rates, as carriers sought to maintain profitability in a challenging environment of high claims by policyholders.
According to Shane Barnhart of Babcock Ranch Insurance Co., newly constructed homes in Babcock Ranch generally receive the most favorable insurance rates. Still, Babcock Ranch Insurance Co.’s Barnhart estimates insurance costs to rise 20-30% in the community.
The Influence of the Florida Legislature on Insurance Regulation & Rates
The Florida legislature is pivotal in regulating insurance and establishing rules affecting carriers and homeowners.
Recent changes in legislation like Senate Bill 2-A have resulted in an ever-evolving market, with insurance providers continuously adapting their rates and coverage options.
At the close of 2022, the Florida legislature passed some changes to insurance regulations to help steady the insurance market.
They eliminated two-way attorney fees, meaning insurance carriers will only have to pay attorney fees if the policyholder wins a lawsuit against them.
Additionally, they changed the assignment of benefits, which allowed roofers to take over the rights to a policyholder’s insurance policy and negotiate with the insurance carrier directly.
This often led to attorneys getting involved if the insurance carrier refused to pay. These changes are expected to make it more challenging for attorneys to take advantage of the law and for insurance carriers to lowball claims.
However, despite these changes, Babcock Ranch Insurance Co.’s Barnhart thinks Florida is still expected to experience rate increases in the coming years due to catastrophes like Hurricane Ian.
And the Effect on the Babcock Ranch Community?
Barnhart says this community, as mostly new homes and sturdier new construction, will face a lower probability of exorbitant insurance hikes.
Babcock homeowners need to be vigilant, however.
As roofs near their 10-year mark, homeowners may encounter difficulties obtaining coverage if the roof exhibits signs of damage. In some cases, carriers may deny coverage outright.
Understanding Babcock Ranch Home & Flood Insurance Requirements
While home insurance is mandatory for mortgage-holders in Babcock Ranch, flood insurance is not required but highly recommended.
As some areas in the community are lower-lying, certain neighborhoods like the Southeast section of Lennar’s Trails Edge and Meritage’s new community Crescent Grove, could be susceptible to flooding during heavy rainfall or storm surges, making flood insurance a valuable investment for homeowners.
Barnhart advises Babcock Ranch residents to consider excess flood insurance, which provides coverage beyond the standard limits of the National Flood Insurance Program (NFIP).
Additionally, homeowners should be aware of the complexities surrounding flood zone designations and the potential implications on their insurance rates.
X Zone Is Not the Reddit Name of a Former Deadhead Now Turned Corporate Lawyer
There are certain areas in Babcock Ranch that are considered flood zone X or “X zone”, which means that property owners in those areas are not required to carry flood insurance by their lender.
However, if the area is re-mapped as flood zone A or AE, then lenders will require property owners to carry flood insurance.
Barnhart notes that there is currently pushback against this requirement because Babcock Ranch is located 35 feet above sea level and did not experience flood damage during Ian.
Some builders believe that the community will be remapped by the Federal Emergency Management Agency or FEMA by the end of 2023 and will likely return to an “X zone” rating.
The Current and Future State of Babcock Ranch Insurance
Barnhart of Babcock Ranch Insurance Co. anticipates that insurance rates will continue to rise in the coming years, eventually reaching an unknown peak.
The primary objective of the Florida legislature is to foster competition among insurance carriers, which would help lower rates for consumers. However, the success of this effort remains uncertain.
If more hurricanes like Ian occur in the future, it’s possible that additional carriers may exit the Florida market, further reducing competition and driving up rates. In such a scenario, homeowners may have limited options, turning to state-run Citizens Property Insurance as a last resort for coverage.
Strategies for Minimizing Insurance Costs in Babcock Ranch
Barnhart of Babcock Ranch Insurance Co. suggests several strategies for homeowners to minimize their insurance costs in Babcock Ranch:
- Conduct regular roof inspections and maintenance to prevent issues that could affect coverage eligibility.
- Install wind mitigation features, such as hurricane shutters or impact-resistant windows, to reduce windstorm insurance premiums.
- Consider bundling home and auto insurance needs with the same carrier to take advantage of multi-policy discounts.
Babcock Ranch Insurance Co.’s Barnhart also recommends:
- Education: Stay informed about your insurance policy, claims process and deductibles. Make it a priority to learn about your insurance needs and coverage before hurricane season.
- Maintenance: Regularly inspect and maintain essential home components, such as water heaters, air conditioners and plumbing. Check for leaks or dripping water under sinks and turn off the water supply when leaving for extended periods.
- Preparation: Be cautious of “door knockers” (roofing contractors) claiming you need a new roof due to minor issues. Understand that unnecessary roof replacements contribute to rising insurance rates.
- Ethics: Be vigilant about potential scams and make informed decisions about your home’s maintenance needs. Don’t think your insurance policy is a kiddy bank to dip into. This kind of behavior causes insurance carriers to leave the area, raising rates.
Between the Dawn & Dark of Night
Jerry Garcia, guitarist and vocalist for the Grateful Dead, sings in Ripple:
There is a road, no simple highway
Between the dawn and the dark of night
And if you go, no one may follow
That path is for your steps alone
A hardcore Deadheat would shy away from associating the mythical band with…insurance.
An analytical Deadhead looks at the ramifications of catastrophic weather events like Hurricane Ian and sees causation at rising rates in Florida, including Babcock Ranch.
In facing the post-Ian landscape, we may be treading gingerly in the dark of night before dawn looking at the rising cost of living in the state, including pressure caused by rising insurance rates.
As we go in Babcock, we don’t go with “steps alone.”
Just witness how this community came together after last year’s storm and fed people in the community shelter and even loaned out their homes for “linemen” to shower and wash their clothes.
We will face rising insurance rates in the dark of night but, together, we will sojourn into dawn and prevail as a community.
Contact Babcock Ranch Insurance Co. HERE. They have access to almost every carrier in the market and access to some carriers that other agents don’t have, including their own proprietary home and flood products through Millennial Specialty Insurance.
If you would like to discuss new construction in Babcock Ranch, tap HERE. For resales, tap HERE. To get the inside scoop on all things Babcock, join the Moving to Babcock Ranch Facebook Group by tapping HERE.
