Florida gulf STR Insurance - sky high?

Question

We are under contract for a 630K Single Family Home in Port St. Joe, FL and are looking at insurance options.  Property is not directly on the beach, it is about 5 houses back from the beach.  So about a 300-400 ft walk to the sand.  Proper insurance is currently at 13K/year without Flood insurance.  This will severely impact the property analysis and cashflow that we projected.  Does this seem the norm for an SFH with 400K on dwelling?  We also have a wind mit and 4 point inspection done but proper is giving no discounts for that. The house is also built on top of 12 foot pilings to protect from flood, as well as it survived hurricane Michael (albeit there was some damage but it was mostly all in tact).

We do have a separate private flood insurance quote for about $600/year so we will probably do that.

We had another quote with some other brokers that are giving discounts for the wind mit/4 point and have quoted landlord policies or homeowners policies (~4-6K annually) but I'm worried we may not be covered for STR on those, even though we have been VERY UPFRONT with insurance carriers that we will be STR'ing the property when we aren't using it personally.  We plan to use the property 1-2 months and STR the rest of the time.

Does this seem normal for a florida gulf SFH that's 5 houses back from the beach?  Just seems outrageously expensive to me on a 400K dwelling.

Aaron Porter · Answer

@Matt Smith  Proper Insurance is almost always going to be the absolute most expensive option.  They have a great product and you are covering all the bases through their policy structuring.  However almost every insurance carrier offers a policy for STR.  In most cases it will be a landlord policy with a STR ryder.  If your agent is trying to give you a homeowners policy run from them as that is the totally wrong thing and if you have a claim you will be denied.  If your agent swears that you will still be covered tell them you want that in writing on their agency letterhead with ink signatures from the principal agent.  This way you can go after the agent when you get denied coverage.

In regards to costs, Florida is extremely expensive right now and those homes on or close to the coast are even more expensive.  Hurricane Ian caused $65 billion in insurable damage.  Which is one of the reasons rates are so high, combined with almost 20 carriers have left the state of Florida in the last year so there are way fewer options.

I have a good contact in Florida for insurance, if you message me I can share their contact info.

Napoleon DeCiutiis · Answer

Matt, after the last couple of hurricanes, insurance companies left the state to go fill their coffer dams in other states.  The remaining ones decided to target the STR market, because they know the investors have $$.  That being said, the problem is on the Gov's desk, we are expecting insurance to decrease within the next year or so, and we are right now I am asking for money at closing to help defray the cost of insurance for the customer.  Insurance along the Gulf Coast is address specific, and I would recommend using local agents.  Not only do they understand the area, they are essential when dealing from a distance while submitting a claim.  If you'd like some help with local insurance agents on the Forgotten Coast/PSJ, I cover that area and can send you some recommendations.  Good luck! You should hopefully be able to start buying the rates down by next year!

Trent Reeve · Answer

We bought a townhome across the street from Panama city beach. I was also surprised at the cost of insurance in Fl. I ended up using a local insurance broker to help me find a policy. Probably looked at 13 quotes. He let me know, anything within almost a mile of the coast would be higher than I would expect. Just the way insurance is in Florida. Happy to provide you the name if you want. But yeah, 1 block away, 5 blocks away, 15 blocks away, its going to be high. Its not just properties on the beach

Barrett Bridgewater · Answer

Have you looked into the underlying assumption that the building should be considered in the flood zone?  I am sure geographically it might be.  But, the elevations might demonstrate that the building sits above the flood level.

If so, it could qualify to have the flood zone designation removed.  That removes any lender requirements for flood insurance.

Could be a huge win if so.  Most people don't know that is an option.

Michael Baum · Answer

This is such a bummer for anyone needing insurance. Good luck @Matt Smith and gratz on the new STR!

Matt Smith · Answer

Thanks Andrew!  Since many of the homeowners quotes are giving us a huge discount for the wind mitigation inspection we have, would it make sense to get a homeowners to specifically cover Wind/Flood damage, and a separate STR policy to only cover fires and other general tenant damage?  Is that even possible to do 2 separate policies like that and roll into escrow?

For Wind/Flood, it doesn't really matter that it's an STR right since those are natural disasters and not tenant related?

Andrew Steffens · Answer

Im sorry those are really questions for a licensed insurance agent, however in my experience there is a hazard policy which must permit STR and the other is separate for wind, and a third for flood if needed.

Andrew Steffens · Answer

Hey Matt - Im a PM based primarily in the Tampa/CLW/St Pete area.  I am representing current clients acquire two new properties next week.  One is in Clearwater 13 mins from the beach.  $850k value and insurance was quoted at $17,000 initially but we got it down to $11,000 by mixing and matching.  Another one $700k value in Seminole, FL 7 mins from beach (3 miles) and they are paying just under $10k.  Neither of these are with flood insurance because they are not in flood zones.  The problem is 3 fold:

1. Not a lot of carriers currently in the market, so fewer competition is raising prices.

2. Wind coverage is whats driving this up in the wake of Ian.

3. Carriers charging more for STR on the hazard side.  I think they are cashing in the rise of STR but they are claiming risk is so much higher, which I do not buy.

Unfortunately it is what it is now.  I think it will get better eventually.

Florida gulf STR Insurance - sky high?

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