One of my clients last week reminded me of an infrequently mentioned financial asset protection tool: the “hurricane account.” Hurricane accounts were established to encourage people to save money to cover uninsured losses from Florida hurricanes. The statute provides that a property owner can set up a segregated financial account to cover insurance deductibles and other uninsured risks of windstorm and flood losses. Deposits into the account are protected up to twice the amount of the insurance deductible. The statute also protects income from the account.
The statue is limited to hurricane insurance for homestead property. Also, the statute’s effectiveness is contingent on the federal government providing tax-exempt status to account’s created to cover an insurance deductible or other uninsured hurricane risk. The statute is not limited to bank accounts, and the contents of accounts are not limited to cash. The statute protects money and “assets” in hurricane accounts. Possibly, a securities account might qualify. I observe that only Florida residents who own a Florida homestead may qualify, the statute does not state that the qualifying insurance is limited to insurance for the homestead. The statute states that accounts qualify if the insurance is for residential property, but not just the homestead residence. One could argue that any homestead owner could protect accounts for other investment residential property, although I suspect that was not the legislative intent. I am not aware of any court decisions interpreting this statute.
This statute provides some interesting asset protection planning opportunities for owners of residences with high deductible hurricane riders. The statute reference is F.S. 222.22(4)(a).