How can the risk of a natural disaster be properly assessed?

Natural disasters are very difficult to predict and to defend against effectively. In Florida, due to the tremendous amounts of coastline, low-lying land with little elevation and increasing sea levels, these states would seem even more vulnerable to damage caused by hurricanes and flooding than in the past. In the U.S. there are designated flood zones that have their own requirements for insurance, with governmental programs designed to provide some coverage where standard policies may have exclusions in flood zones in coastal areas. A good insurance consultant can advise you through this and help you determine if these risks are insurable. A consultant will look at if the cost of doing so, in the grand scheme of the property acquisition, makes financial sense and provides the coverage you need. Florida's vast coastline also has some areas, due to historic weather patterns, elevation and the configuration of the coastline, that may be more or less vulnerable to damage in a hurricane. These figures and information are available and your insurance consultant should be able to help you find those statistics, which are helpful, but not determinative, in assessing risk and cost.

By identifying the geographic area you are looking in, you clearly have a valid concern about potential storms. I would also have a concern about rising water levels, depending on the location. I would highlight a couple of things for you to think about. I would start with the need for and availability of flood insurance. There are maps in which flood zones are marked. Federal flood insurance can be purchased. Check the availability and price. Property insurance does not cover the risk of flood. It should cover water damage, but there are significant restrictions on coverage for wind damage. If the building is damaged, check to see whether there are any zoning restrictions on rebuilding to the same specifications. Some risks can be covered; others should make you think twice. You need a sophisticated counsel or advisor.

I would consult with an expert insurance consultant familiar with this geographic zone to get an accurate estimate of how much insurance rates might climb during the next decade.

Unfortunately, you must bring this one up with mother nature! From our experience, we cannot really value a property based on risked factors of hurricanes. What we have experienced within the past is to maximise on hurricain insurance policies, which have been expensive, and it does eat into the economics of the asset/development.

The cost of insurance over the risk in question is a useful gauge of the risk involved. Because insurance is usually purchased in one-year increments (although bespoke policies may be available for longer periods), the rate of increase over recent years would also be useful information.