By on September 7, 2017

hurricane

Florida-area car dealerships are annoyed that insurance companies pulled the plug on policies earlier this week, fearing further hurricane-related payouts as Hurricane Irma approaches the coast. Insurers, including Progressive and Allstate, are reacting to losses incurred in Texas during Hurricane Harvey’s assault last month.

While this is standard practice for some companies, it isn’t a universal trend. State Farm, for example, said it would continue offering coverage until after a national hurricane advisory had been issued. 

“If you take us out of business for a week before a storm even hits and maybe a week after, you can imagine the impact, not just on consumers who are inconvenienced but the state’s economic resources,” Ted Smith, the president of the Florida Automobile Dealers Association, told Bloomberg.

“I’m urging through our public officials that they talk to these insurance companies and make sure they follow the policy of State Farm — wait until there’s imminent danger before you stop writing cars.”

According to capital markets firm FBR & Co., insurance companies may be looking at over $10 billion in claims stemming from Harvey — which was a Category 4 storm at landfall. Irma is now a Category 5 and one of the most powerful hurricanes ever recorded. Early estimates believe she could be capable of causing $130 billion in damages in the United States.

April Eaton, a spokesperson for Allstate, said the company issued a property and auto moratorium in 23 Florida counties this week. Progressive also verified it had stalled new policies in the state but was less specific on the regions affected.

Barry Frieder, the president of Miami-based car dealership Potamkin Automotive, said insurers stopped writing policies Tuesday. “We’ve kind of been out of business since yesterday,” Frieder explained.

Ideally, Florida dealers aren’t hunting for sales in the final days leading up to Irma’s landfall and are evacuating instead, but it’s easy to sympathize with their plight as the storm looms. Hurricanes can be very bad for business. Harvey reduced the seasonally adjusted rate of U.S. auto sales in August by as much as 400,000 vehicles. Projections before the storm hinted that the industry could have its first monthly sales gain for the year. With Irma expected to further suppress deliveries, the prospect of the auto industry bouncing back in September looks bleak.

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44 Comments on “Car Dealers Claim Insurers are Halting Policies Ahead of Hurricane Irma...”


  • avatar
    srh

    Not to be macabre, but I wonder if there are pre-storm deals to be found at those dealers. A lot easier to get a car off the lot and cash in the bank than to deal with the car after the storm, perhaps?

    • 0 avatar
      Garrett

      The cars in inventory should be insured, as I understand it.

      It’s like a game of hot potato. Whoever is insuring the car when disaster hits eats the claim.

      • 0 avatar
        28-Cars-Later

        In theory with all of the money printing and inflation, both insurers and re-insurers (in Europe) should be flush with cash or equities easily convertible to cash. Yet, they will screw everyone they can and cry with two loaves of bread under each arm until bailout.

        Of course this whole fake economy is just a Jenga game. C’est la vie.

  • avatar
    ash78

    But with Texas, the issue was rainfall and its management. Texas has more traditional waterways/dams and is prone to flooding, as we all know. That danger comes from the sky and from upriver, and the property claims are mostly from flooding.

    With Florida, the main danger is the storm surge, so dealers away from the beach (read: all of them) should be okay on that front. It’s all going to come down to how much wind damage they take. Florida is not prone to much flooding in the traditional sense. $0.02

    • 0 avatar
      ACCvsBig10

      Pretty much all of Florida is beach area. You can pretty much drive 30-40 min from anywhere and hit the water.

      Plus dealers need to worry about wind damage and flying debri damaging their vehicles and possibly let water into the interior

      • 0 avatar
        ash78

        Storm surges don’t usually affect much beyond 100 yards inland, though — they lose power pretty quickly after hitting the beach (and buildings).

        Most of my family in coastal FL just evacuates 10-20 miles inland, which reduces the risks by an order of magnitude (Including the risk of being trapped in your car on the highway).

        There’s still flying debris inland, but barring a direct hit from a tornado, most houses will still be partially intact. I’m just saying I don’t think the auto claims will be anywhere near as high as Harvey. Floods are a quick total loss.

        • 0 avatar
          PrincipalDan

          There is the potential for Irma to move vertically right up America’s dangling… peninsula meaning that both coasts of Florida would be getting simultaneously pounded.

          • 0 avatar
            28-Cars-Later

            HOMER: Florida? But that’s “America’s Wang”!

          • 0 avatar
            FreedMike

            “There is the potential for Irma to move vertically right up America’s dangling… peninsula meaning that both coasts of Florida would be getting simultaneously pounded.”

            Normally, when both ends of the bottom of the dangling peninsula are “pounded,” it’s not so bad.

            (Seriously…I hope to God this one causes minimal damage. This could get REALLY ugly…I’m talking Andrew ugly.)

          • 0 avatar
            28-Cars-Later

            I’m with you there Freed. Let us pray our Lord dost not release thy holy torque upon our nation.

  • avatar
    srh

    Not to be macabre, but I wonder if there are pre-storm deals to be found at those dealers. A lot easier to get a car off the lot and cash in the bank than to deal with the car after the storm, perhaps?

  • avatar
    RHD

    If the insurance companies are cancelling policies because the hurricane is coming, they are monumentally unethical at the least, and probably breaking laws governing insurance. If this practice isn’t illegal, it certainly should be.
    I don’t do business with Progressive or Allstate, and certainly wouldn’t in the future.

    Similarly, Lloyd’s of London became a well-established powerhouse by honoring all claims from the 1906 earthquake in San Francisco, while nearly all other insurers just left town and paid nothing.

    • 0 avatar
      nels0300

      They’re not cancelling policies.

    • 0 avatar
      RHD

      “Car Dealers Claim Insurers are Halting Policies Ahead of Hurricane Irma”

      “Halting” indicates stopping the movement of something that’s already organized and in action.

      “Florida-area car dealerships are annoyed that insurance companies pulled the plug on policies earlier this week, fearing further hurricane-related payouts as Hurricane Irma approaches the coast.”

      “Pulling the plug” indicates suddenly turning off something that’s functioning, such as a television, by sudden, decisive and inappropriate means. It doesn’t mean refusing to write new policies.

      The misleading headline just increases the click rate, and with the first line of the article fails to clearly communicate the issue and compromises
      journalistic accuracy.

  • avatar
    Lou_BC

    I can see why insurance companies are not accepting any new insurance policies. We have people under-insured and then scramble for insurance at the last minute. Long term policy holders are what build up insurance company coffers to “weather” a big payout. A report stated that only 20% of homeowners in Texas had appropriate insurance. I’m betting that many businesses and private individuals are chronically insured.

  • avatar
    Fred

    I’m not clear on what’s going on here. When you sign up for insurance there is always a waiting period before you can collect. This prevents people from signing up a week before a storm hits. Are insurance companies canceling policies a week before the storm? That can’t be right.

    • 0 avatar
      ACCvsBig10

      Also if their halting insurance, thats mean people can’t drive newly purchased vehicles off the lot. Vans and suvs sales probably perked up right before people evacuate.

  • avatar
    28-Cars-Later

    Corey, could you interpret the Harvey/Irma situation from an insurance industry perspective? Thx.

  • avatar
    VW4motion

    Art of the deal lives on !

  • avatar

    And us dealers are the scumbags…

    Anyway, I have someone taking delivery tomorrow and one still wants to close Saturday. I told them don’t expect any gas except what’s in the tank.

    • 0 avatar
      sgeffe

      I’ve gotta figure that you folks want to get cars into the people’s hands before..that way, it’s the customer’s problem, not yours!

      (Of course, if it were me, I’d delay delivery until after! I saw a couple stories about someone’s day-old car was floating out of their garage, lights flashing and alarm blaring as the systems shorted-out, back during Katrina, and I saw a few of the same during the last couple weeks! Surely, someone will drive home a new pride and joy tomorrow or Saturday, only to have it float out the garage door on Sunday morning.)

      Obviously, that stuff can be replaced! But for those in that situation, it’s just one more thing to deal with in the aftermath, assuming that there’s no injury or worse.

      My prayers are with all of you in Florida!

  • avatar
    ajla

    If I don’t make it through the weekend, remember me for my greatness.

  • avatar
    e30gator

    I’m a little late chiming in but I live smack dab in the danger zone (Sarasota,Florida). Here’s my question to the b&b…
    We have 3 cars: ’13 Buick Enclave (full coverage), a paid off ’09 Saturn Aura (liability only) and a ’96 BMW Z3 Roadster (liability only). All covered through Progressive.
    The Buick is our main family vehicle, Saturn is wife’s commuter, Z3 is weekend fun.
    We can only fit one under a protected roof.
    Do we…
    A) protect the Buick and park the other two in the driveway (I have a cover for the bimmer)?
    B) protect the daily driver, less insured Saturn and leave the other two outside?
    C) put the soft top roadster, most at-risk for damage but less important than others, inside and roll the dice with the other two?
    I’ve been pondering this for two days. Advice welcomed!

    • 0 avatar
      87 Morgan

      e30gator…

      If you only have liability on the two cars, you will not be covered by an flood damage etc, as this falls under the comprehensive portion of the policy which covers things like hail, hitting a deer, etc. **If** the storm is as bad as they say, let the Buick go as that will be covered. The Z3 would be the one that I would put in the garage and get it up as high as you safely can on jack stands if you live in an area prone to flooding.

  • avatar
    87 Morgan

    Insurance companies ceasing to write/bind new policies ahead of a major storm like this is commonplace.
    No insurance company is canceling coverage or doing anything like that. It was mentioned above, why should Allstate or whomever magically start binding coverage this week for (using e30gator as an example) a person who has 3 cars; 2 with liability and one with full coverage comp & collision and suddenly has an epiphany that he needs full comp/collision all right now on his Z3 and Saturn Aura which he was perfectly willing to go with liability last week? Then most likely to have him drop the additional coverage a week after the storm should things turn out hunky dory for him and no cars are damaged. That is not how insurance companies work, the consumer generally pays annually, semi-annually, or monthly to cover risks. Not, hey can I buy a policy for the 2nd week of September?

    The car dealers are crying because they are affected by the edict as it is a blanket moratorium on binding any new policies or changes to existing. So, not only can you not change your existing coverage up or down, you can’t add additional policies or scheduled property. The insurance companies are really not thinking about people buying cars who need coverage, this is more for those who have already bought coverage and want to change.

    Think of it as roulette, the dealer has waved his hand letting all the players know the ball is in play and all bets have been placed and there is no further action good, bad, or indifferent. Heres to a green 00!

    • 0 avatar
      e30gator

      Just to clarify, changing my coverage was not something I mentioned in my original post. That said, I haven’t filed an insurance claim in almost 20 years, meanwhile premiums continue their upward trend. Therefore, I really have a difficult time finding sympathy for insurance companies.

      • 0 avatar
        87 Morgan

        I know, was using the example of someone with 1 car with full comp/collision and two without. Pretty common scenario from an ownership perspective.

        I work for an insurance co. and yes you should not have much sympathy for the insurance co. Premiums will continue the upward trend BTW, cost per claim is escalating in a dramatic fashion on the auto side.

  • avatar
    FreedMike

    Insurance companies will also bail on writing new homeowners’ policies if the property is being threatened by a wildfire.

    God help any homeowner down there who rolled the dice on flood/hurricane insurance…they aren’t getting any now.

  • avatar
    28-Cars-Later

    I’d just like to wish good luck and Godspeed to Flybrian and the other TTAC’ers in Florida who I assume are trying to evacuate.

  • avatar
    e30gator

    Thank you for saying that. Right now there’s no gas anywhere to be found in Fla, and my brother in Charlotte,NC said it’s almost as bad up there with all the evacuees headed in. The roads are at a near stand still too. Evacuation might’ve been an option a few days ago (when Irma still looked like it would ride up the Atlantic, but getting stuck somewhere w/o gas is just too scary a prospect at this point. Looks like it’s going to be a hurricane party weekend!

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