Jan. 28, 2020
Currently, there is over $900 billion in insured real estate in Miami Beach, much of it at risk of storms and storm surge. A new threat has been revealing itself as of late and continues to get worse. Called "King Tides," tides at their highest levels continue to flood Miami streets, causing unseen damage to buildings' electrical wiring and support. In 2019 Miami set daily records for that a straight week for high tide in July and August. On a full moon combined with high-tides, Miami streets can look more a raging river than a major metropolitan area. The water is causing coastal erosion, and no one is quite sure what it's doing to the foundations of the buildings downtown.
In 2017 Hurrican Urma turned the streets into rivers when the flooding reached record heights and amount of water on the roads. Luckily Irma moved away from Miami and didn't directly hit the city or the damage from the sea, and the storm would have been much worse. When Hurrican Sandy flooded downtown Manhattan in 2012, massive damage to underground infrastructure occurred, forcing New York to put sandbags down as the first line of defense. The problem is Miami Beach is on a lower elevation closer to sea-level and has more risk associated with its location in the in Carribbean. Sandbags are just not going to cut it.
Insurance companies have begun to fight claims they believe are related to the weather over time and not caused by a single event. For instance, take a look at the lawsuit between 6801 Collins Avenue, a high-end Miami Beach hotel-condominium, and their insurer Lexington Insurance Co. (AIG) for failure to pay a $16.7 million claim from Hurrican Irma in 2018. The insurer claims that damages are not all related to the storm but instead associated with natural wear and time.
With $900 billion at risk, these insurance companies are likely to see their reserves deplete if Miami were to get by a storm directly. With rising water levels, its a matter of years before this becomes a regular occurrence. Yet the city of Miami Beach continues to issue permits and insurance companies continue to insure.
What do you think would happen to your insurance company if a storm were to hit Miami-Beach which has no natural protections? Could the insurance companies afford to pay out that amount in claims? FEMA would only cover small numbers of insured because much of the house pricing is above FEMA payout limits. There is a potential for some of the most extensive insurance companies to default on their customers as has happened in the past, but we've as yet not had a recent repeat of the "Great Miami" hurricane, where the population was much smaller, as was the infrastructure, which at the time caused $100 million in damages (nearly $1.5 billion in 2020 dollars) and killed hundreds.
Will your insurer be able to meet your demands? Will insurers be able to continue to take the risk? What will happen to Miami-Beach real estate if insurers start backing off?
The five largest Insurance companies* in Florida are:
Visitor Comments: [Comment] Note: Pages are moderated.
It's a good thing Miami has not been directly hit by a major storm, and I hope that the new building codes passed over the years have made it safer for everyone.
Peter [Feb. 11, 2020]
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If Miami were to get hit again by a storm like Andrew all bets are off.
Rose [Feb. 07, 2020]