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If you live in a possible path of a hurricane, it’s important to understand what your homeowners insurance protects you from — and what it doesn’t.
While homeowners insurance does technically cover hurricanes, thanks to storms like Andrew and Katrina, state regulations and reinsurance companies (the companies that insure the insurer) have forced the hand of primary insurers and required them not to take on as much risk.
To lessen risk, insurance companies in numerous coastal states require separate windstorm coverage with percentage deductibles rather than fixed dollar amount deductibles if your home is damaged by a hurricane. It’s also common – once a storm has been officially named – for moratoriums to be placed on writing new policies; moratoriums also prevent you from increasing the limits of existing policies.
On top of all that, are you actually covered, even when you think you are? Hurricane damage can be extremely costly, so you’ll want to be sure you’re being reimbursed enough to rebuild your house if its flattened. In addition to coverage amounts, be sure that every condition, like hurricane flood waters, are covered, and check for any coverage add-ons or riders that could help keep your expenses to a minimum after the hurricane makes landfall.
If you live in a hurricane-prone coastal area, your basic homeowners insurance policy will cover the structure and contents of your house against fire, lightning, theft and tropical storms that aren't specifically hurricanes. But once the weather guy speaks the hurricanes name, all bets are off with your basic policy, and that’s where flood insurance and windstorm coverage – or in some states and policies, a hurricane rider, comes into play.
Your homeowners insurance policy won’t cover flood damage caused by hurricanes; and won’t cover floods at all, period.
But many policyholders who live in high-risk coastal states don’t necessarily live in floodplains and may not think they need flood insurance. When a hurricane makes landfall and causes flood damage to their home, they’re shocked to find out that nothing is covered.
Bear in mind that 90 percent of all natural disasters include some form of flooding, according to the Insurance Information Institute. If you live in a flood zone or coastal community prone to hurricanes, you’ll want to add a separate flood insurance policy, which is managed by the National Flood Insurance Program through FEMA.
You can use FEMA’s Flood Map Service Center to assess your flood risk.
Windstorm insurance covers wind and hail damage from hurricanes, and works in tandem with flood insurance and additional provisions like sewer backup coverage and debris removal coverage to form your homeowners insurance policy.
The coverage types included and the way you determine the coverage you need is similar to how you determine hazard insurance in your standard form policy. There are a couple additional coverage types not included in a standard policy, like increased cost of construction coverage and debris removal coverage.
Covers the structure of your home, your roof and other structures on the property like a fence, deck or pool. Coverage should equal the total rebuild costs of your home or the amount that it would cost to build a brand new home. Remember, hurricane damage is expensive and could drain you financially if you’re forced to pay too much out of pocket. You can talk to a licensed representative at Policygenius to make sure that you’re home and property is fully insured
Covers property not physically attached to your house, such as clothing, furniture, appliances, plants, and trampolines. This coverage also covers any improvements or alterations that have been made to the house. Take a careful inventory of everything you own and make sure your limits equal the cost to replace it all brand new.
Additional living expenses
Also known as loss-of-use coverage this is part of your policy covers temporary housing and food costs if your home is deemed uninhabitable. You’ll want to make sure there’s enough here to pay for the extensive and exorbitant costs associated with hurricanes.
If the hurricane is a Category Five storm and wipes out everything in its path, including your home, you’ll need to be reimbursed for temporary shelter and restaurant meals while your home is being rebuilt or repaired, which can drag out. For that reason, most insurers will offer the option of higher coverage limits depending on where you live – so if you live on the coast, look into increasing your loss-of-use coverage amount and time limits for the coverage.
Increased cost of construction (ICC)
Covers additional costs associated with building compliances and unforeseen construction cost increases in your area after a disaster. If the cost of labor or supplies increases after a hurricane, and your dwelling coverage only covers the cost of materials or labor prior to the disaster, ICC reimburses you for that extra amount.
If a hurricane causes debris to accumulate on your property, like a fallen tree or power line, your windstorm insurance covers the costs of getting rid of the debris.
Another an unwanted consequence of hurricanes is sewage overflow resulting from floods. Sewer backup coverage protects your home and personal belongings from water damage and isn’t covered under a standard policy. You can add it as a rider to your policy.
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In most homeowners insurance policies, wind damage to your home is covered by a dollar amount deductible, which is a fixed amount that you pay out of pocket to your insurer before you’re reimbursed for damage or theft to your home.
However, if you live in a coastal community and it’s determined that the damage was caused by winds from a hurricane, you’re required to pay the hurricane deductibles specified in your windstorm coverage, which is a percentage – usually 1% to 5% but sometimes higher – of your home’s insured value. If your deductible is 5% and you’re covered for $400,000, if a hurricane hits, you’re on the hook for $20,000 before the insurer will cover the rest of your claim.
Your hurricane insurance deductible can be easily located on your policy’s declaration page, which is the monthly or annual invoice for your policy.
Almost every state on the Atlantic coast allows insurers to charge special deductibles for hurricane damage, but depending on your insurer and state you live in, you may have the option to pay a higher premiums in exchange for a lower fixed-price deductible.
What sets the percentage-deductible wheels in motion varies by state and insurance company, but companies typically wait for an official hurricane ruling from the National Weather Service (NWS). Otherwise known as a deductible trigger, the deciding factor could be that the storm was given a name, whether it was declared a hurricane watch or warning, or whether the hurricane’s intensity was defined.
Homeowners insurance companies in every Atlantic coast state except New Hampshire include percentage deductibles that you can add onto your policy. We provided a list of the 19 states and District of Columbia where insurers require hurricane deductibles, along with links to the associations in states that offer special form hurricane winds coverage for people who can’t afford or are unable to buy it elsewhere.
Keep in mind that what qualifies as a hurricane during underwriting varies from state to state, so be sure to check with your state’s insurance department to find out what constitutes a hurricane “trigger”. When it comes to paying a hurricane deductible versus a dollar amount deductible, “the more you know” can’t be overstated.
You’ll also want to see if insurers in your state offer discounts for being proactive and storm-proofing your house against powerful storms. Certain coastal areas may also have financial programs for people who can’t afford insurance.
An insurance moratorium is a period of time before a hurricane or bad storm where new policies can’t be written and updates to existing policies can’t be made. Most carriers dictate that once a hurricane watch or warning has been issued by the NOAA, coverage can’t be written until a certain number of hours after the watch or warning expires, usually anywhere from 24 to 78 hours, though some moratoriums can last longer . If you forgot to add water backup coverage to your policy, or you don’t have a policy at all, you can’t update your policy or apply for a policy until after the moratorium period ends.
Fortunately, there are steps you can take to limit hurricane damage to your home if you’re underinsured or don’t have a policy at all. Regardless of whether you’re underinsured or fully insured, the Insurance Information Institute recommends taking the following step in the months and weeks leading up to a hurricane or hurricane season. Please, don’t wait for the days leading up to do this:
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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