As hurricane season begins, Biltmore Hotel cuts windstorm coverage in half

The Biltmore Hotel was forced to reduce its windstorm insurance coverage, marking another sign of the insurance crisis in Florida. 

The historic hotel’s owners received preliminary approval from the Coral Gables City Commission on Tuesday to carry $50 million of windstorm coverage, half of the $100 million it is required to have in its lease with the city. The item will return to the commission for a second reading approval at an unspecified later date. 

The current policy, with the reduction in coverage, extends until the end of March 2024. Owner Tom Prescott said it is the only insurance policy that the hotel is seeking permission to reduce, and the hotel is “actively seeking to fill that replacement.” He added that the reduced coverage is still enough to protect the property in the case of a 500-year or 1,000-year storm, based on industry standards and modeling. 

Hurricane season officially runs from June 1 to Nov. 30. Most hazard, fire and theft policies do not include windstorm coverage.

“We’re paying almost double our premium last year for a lesser coverage amount,” Prescott said, adding that windstorm coverage now costs nearly 3.5 times more than it did in 2020. 

Biltmore Hotel L.P. has the lease for the 271-key hotel at 1200 Anastasia Avenue, which dates back to 1986. The historic hotel was developed in 1926 and sits on a 150-acre property owned by the city. The lease sets requirements for property insurance for all perils equal to $100 million or the full replacement cost of the resort, whichever is less. 

“This is a property that is going to require an immense amount of attention over the next 10 to 20 years,” said Coral Gables Mayor Vince Lago. 

Lago suggested having the city’s insurance advisory board discuss the lease amendment before it goes to second reading, as well as other tweaks to the request. 

“This is only going to get more expensive. We’re in the middle of hurricane season,” he said. “Insurance is not going to go down.” 

Property insurance premiums have been escalating in Florida for decades, but recent hurricanes and other global disasters have made the situation worse for both homeowners and commercial property owners. Many insurers have also stopped offering coverage over the years. 

Hurricane Ian, which made landfall along the state’s west coast as a Category 4 storm in September, contributed to recent increases, even though it did not cause damage in South Florida. The damage wrought by Ian reached $109 billion, making it the costliest storm in Florida history. 

Commercial insurance rates are expected to increase 45 to 50 percent this year statewide, with some expected to double, according to a Yardi Matrix report released earlier this year. 

Prescott said he is working to continually improve the Biltmore property “at a rate that does not compromise the business itself.” The ownership has invested more than $50 million in improvements, including storm impact windows and roof repairs, since 2017, he said. 

Read more

South Florida

After Ian: South Florida’s construction costs, insurance to rise

South Florida

Soaring costs and slowing demand complicate South Florida condo projects

South Florida

Florida Senate passes industry-friendly homeowners insurance reforms