Florida Net Lease Post-Ian: How Insurance Is Reshaping the Deal Stack

TL;DR

Hurricane Ian made landfall in Southwest Florida on September 28, 2022, causing widespread damage and substantial insured losses. The Florida commercial property insurance market has undergone material restructuring in the years since — with major national carriers reducing or exiting the state, Citizens Property Insurance (the state's residual market) expanding coverage materially, and commercial property insurance premiums rising. For net lease investors, insurance is no longer a small OpEx line you can estimate at a flat per-SF rate — it requires specific underwriting attention on every Florida deal, potentially with implications for lease structure and exit pricing.

The Insurance Market Reset

Hurricane Ian produced one of the largest insured losses in US history. The Florida property insurance market, already under pressure from legislative and litigation dynamics, underwent acceleration of challenges already in motion.

Key structural changes in the Florida commercial property insurance market since 2022:

Major carrier exits and reductions. Several national property insurers reduced or exited Florida commercial property business. Admitted market capacity for coastal and hurricane-exposed commercial properties contracted.

Citizens growth. Florida Citizens Property Insurance Corporation, the state-created residual market insurer, has grown policy count and exposure materially. Originally designed as an insurer of last resort, Citizens now insures a larger share of Florida commercial property than in years past.

Excess and surplus (E&S) line growth. Non-admitted carriers have absorbed some of the commercial property demand that admitted carriers declined. E&S pricing and terms are generally less favorable to buyers than admitted pricing.

Reinsurance cost increases. Florida reinsurance pricing has risen, affecting primary carriers' pricing, availability, and deductibles.

Property rate increases. Commercial property premiums have generally increased materially since 2022, with specific deals varying widely based on property type, location (coastal vs inland), construction, and loss history.

What This Means for Net Lease Underwriting

For Florida net lease deals, insurance is now a material variable in underwriting. Previously, many underwriters could use industry-standard per-SF insurance estimates. Post-Ian, that approach produces material errors.

Get Actual Insurance Quotes

For any Florida net lease deal:

1. Request the seller's current insurance bills. Premium, deductible, coverage limits, carrier.

2. Get a live quote from an independent broker. What would insurance cost for a new buyer at this property? This may be materially higher than the seller's current bill.

3. Quote multiple structures if applicable. Admitted vs E&S; master policy vs standalone; different deductible structures.

4. Factor in hurricane deductibles. Florida policies typically carry separate hurricane deductibles (often 2-5% of coverage, or a flat dollar amount). These are material expenses if a storm event occurs.

Watch for Coverage Gaps

Florida commercial property coverage has tightened post-Ian. Specific gaps to watch for:

• Flood coverage limits reduced or excluded on certain policies
• Wind exclusions in low-coverage areas
• Business interruption limits reduced
• Sublimit restrictions (specific perils at lower-than-policy-limit coverage)
• Named storm deductibles that may differ from general coverage

Compare the coverage the seller has to the coverage a new buyer should realistically carry. The gap affects risk management but also economic underwriting.

Lease Structure Considerations

Different lease structures allocate insurance cost differently:

Triple-Net with Full Insurance Reimbursement

Tenant reimburses landlord for all insurance costs. Post-Ian, this has major implications:

• Insurance costs have increased materially; the lease pass-through pushes higher costs to the tenant
• Tenant may push back on renewal rent if total occupancy cost (base rent + insurance + taxes) has become disproportionately high relative to market
• If tenant renegotiates or defaults, landlord absorbs the insurance cost directly

Modified Net Lease with Insurance Caps

Some leases cap annual insurance reimbursement at 3-5% above base year. In a rising-rate environment like post-Ian Florida, landlord absorbs the difference between actual insurance costs and the capped reimbursement.

Base Year Stop

Similar to CAM base year stops — the landlord reimburses only increases above the base year amount. If the base year was prior to Ian, post-Ian insurance increases flow to landlord.

Separate Insurance Clause

Some leases specifically allocate insurance responsibility — tenant carries liability; landlord carries property; specific cost allocations apply. Read carefully.

Geographic Variation Within Florida

Insurance costs vary materially within Florida:

Coastal markets (Southwest, Gulf Coast). Most affected by Ian and subsequent reinsurance cost increases. Highest premium levels; some coastal ZIP codes have limited carrier options.

South Florida (Miami-Dade, Broward). Major coastal exposure but sophisticated insurance markets with some capacity; high but generally accessible premium levels.

Central Florida inland (Orlando, Ocala). Less hurricane exposure but not immune; lower premiums than coastal but still elevated vs historical.

North Florida inland (Jacksonville, Tallahassee). Least affected by Ian but still feeling general market firmness.

Panhandle. Hurricane exposure distinct from peninsular Florida; varies by specific location.

What Good Underwriting Looks Like

A proper Florida net lease underwriting in 2026 should include:

1. Actual post-close insurance quote (not historical seller's bill)
2. Lease structure analysis on how insurance costs are allocated
3. Base year stop or cap exposure modeled if applicable
4. Hurricane deductible budgeted in operating reserves
5. Coverage gap review vs appropriate loss protection

Compared to a non-Florida deal underwriting, this is genuinely additional work — but it catches real economic exposure that would otherwise surprise the buyer post-close.

The Exit Implications

For a seller, post-Ian insurance reality may affect exit pricing:

• Buyer underwriting will reflect realistic post-close insurance costs (not seller's current bills if they've avoided renewal rate increases through carrier relationships)
• Buyers may want insurance-inclusive economics built into their target cap rate
• Some buyers (particularly institutional capital with limited Florida mandate) may pass on certain Florida deals entirely

For a buyer, understanding the insurance picture before quoting:

• Provides negotiation leverage on deals where seller's numbers are optimistic
• Identifies deals where cap rate already reflects insurance reality (attractive entries)
• Prevents post-close surprises

The Bottom Line

Florida commercial property insurance has materially reshaped since 2022's Hurricane Ian. For net lease investors, insurance has transitioned from a routine OpEx line to a deal-structuring consideration requiring specific diligence.

Any Florida net lease deal underwriting that doesn't include realistic post-close insurance costs is underwriting a different deal than the one you'll actually own. Get real quotes; model real lease allocations; budget for real hurricane deductibles. The extra work is the job in 2026.

Editorial disclaimer. This article is published by Trestle Research for informational purposes only. It is not investment, legal, or insurance advice. Insurance market conditions change continuously; verify current quotes and coverage directly with licensed insurance professionals for specific properties. Always consult qualified counsel and insurance brokers on specific deals.

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