More on Home Insurance
More on Home Insurance
Homeowners insurance technically covers damage from tropical hurricane winds and rain. However, depending on where you live a special hurricane or wind deductible may apply.
Most homeowners insurance policies cover wind damage and wind-driven rain during a hurricane
Insurance companies may charge separate wind or hurricane deductibles before they’ll cover tropical storm damage
Your policy won’t cover hurricane flood damage, but separate flood insurance is available
Once a storm is officially declared, insurers may issue a moratorium on insurance, so update your coverage in advance of hurricane season
With homeowners insurance, you’re protected from the perils listed in your policy, including damage from hurricane winds and wind-driven rain. However, the storm surge and catastrophic flood damage following a hurricane is not covered by homeowners insurance — you’ll need to purchase flood insurance or add supplemental coverage to your policy to be fully protected from hurricane-related damage.
If your home is in a particularly high hurricane risk area, it’s possible that your insurance company will charge you a separate deductible for hurricanes. Most insurers in Atlantic coast states now require a separate named storm or hurricane deductible if a tropical storm is named or declared by the National Weather Service.
When you update or finalize your homeowners insurance policy limits, your insurer will give you the option to choose your hurricane deductible amount or leave the deductible off the policy entirely for a reduced insurance premium. Keep in mind that if you choose to omit the hurricane deductible from your policy, your insurance company won’t reimburse you for property damage caused by hurricane winds.
It’s also common for insurance companies to place a moratorium on new and existing policies once a storm has been officially named. A moratorium on insurance means insurance companies refuse to insure new customers and existing customers can’t update their existing policy — so if you don’t have a hurricane deductible but decide you need one after a moratorium has already been issued, you may be out of luck.
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Most homeowners insurance perils are covered by dollar amount deductibles — a fixed amount like $500 or $1,000 that you pay out of pocket to your insurer during a claim before they’ll reimburse you for the remainder of the loss amount.
However, if your policy has a hurricane deductible and your insurer determines that the damage to your property was caused by hurricane winds, you’re required to pay that separate deductible before you’ll be paid out for a claim. Your hurricane deductible is typically a percentage — usually 1% to 5% but sometimes higher — of your home’s dwelling coverage. If your deductible is 5% and you’re covered for $400,000 and you file a claim, you’ll have to pay a $20,000 deductible before your insurer will cover the remainder of your loss.
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 the state you live in, you may have the option to pay higher premiums in exchange for a lower, fixed-price deductible.
You can also leave the deductible off of your policy altogether for a reduced premium, but this might be a bad idea if you live in an area at high risk of hurricanes.
The event that triggers the hurricane deductible varies by state and insurance company, but companies typically wait for an official hurricane ruling from the National Weather Service. Otherwise known as a deductible trigger, the deciding factor could be that the storm was defined (Category 3 or 4), given a name (Lucy or Michael), or declared a hurricane watch or warning.
Homeowners insurance companies in every Atlantic coast state (except New Hampshire) include percentage hurricane 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 windstorm coverage for people who can’t afford it or are unable to buy it elsewhere. Keep in mind that some states do not offer this coverage at the government level.
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.
You should also 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 special financing programs for people who can’t afford insurance.
Hurricanes happen most frequently between June and November every year. Before hurricane season starts, be sure that every section of your policy is optimized to reflect your home’s hurricane risk. That includes updating coverage amounts for the six basic protections in your policy as well as adding enhanced coverage to your polic like a flood endorsement to fill in the various coverage gaps.
Pay special attention to the following coverage areas:
Your dwelling coverage limit should be equal to the total rebuild cost of your home. Remember, hurricane damage is expensive and could drain you financially if you’re underinsured and forced to pay too much out of pocket. To be extra safe, consider extended or guaranteed replacement cost coverage for higher coverage limits.
Personal property coverage covers property not physically attached to your house, such as clothing, furniture, appliances, plants, and trampolines. Take a careful inventory of everything you own and make sure your belongings are insured at their replacement cost instead of their actual cash value or depreciated value, so you can replace them with new items of equivalent value if they’re damaged or destroyed.
Also known as loss-of-use coverage, additional living expenses will cover temporary housing and food costs if your home is uninhabitable after a hurricane.
You’ll want to make sure there is enough here to pay for the extensive and exorbitant costs associated with hurricanes. For instance, if a Category 5 storm rolls through 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, a process that can last months or even years.
For that reason, most insurers will offer the option of higher loss-of-use coverage limits depending on where you live. If you live on the coast, look into increasing your loss-of-use coverage amount and time limits for the coverage.
Consider filling in your coverage gaps with the following coverages to make sure you’re fully insured against tropical storm damage:
Your homeowners insurance policy won’t cover flood damage caused by hurricanes, but they may offer a flood coverage endorsement that you can add onto your policy. If not, most large insurance companies offer flood insurance through the National Flood Insurance Program — a division of the Federal Emergency Management Agency.
However, many policyholders who live in high-risk coastal states don’t necessarily live in a high-risk flood zone and aren’t aware that homeowners insurance doesn’t cover flooding. When a hurricane makes landfall and causes flood damage to their home, they’re shocked to find out that nothing is covered.
According to the Insurance Information Institute, 90 percent of all natural disasters include some form of flooding, so homeowners in coastal states should make sure their home is well-equipped with flood insurance.
You can use FEMA’s Flood Map Service Center to assess your flood risk.
If a hurricane causes debris to accumulate on your property, like a fallen tree or power line, your homeowners insurance will cover the cost of getting rid of the debris, but only up to a certain amount. Debris removal after a hurricane can cost you well into the thousands, so check to see if your insurer offers a coverage endorsement to increase your debris removal reimbursement beyond the policy limits.
Another unwanted consequence of hurricanes is sewage overflow resulting from floods. Water backup coverage protects your home and personal belongings from water damage if sewage water backs up into your home through your plumbing or sump pump. You can add it as an endorsement to your policy.
An insurance moratorium is a period of time before a windstorm or natural disaster 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 — although some moratoriums can last longer.
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 a hurricane to do this:
Pat Howard is an Insurance Editor at Policygenius in New York City, specializing in homeowners insurance. He has been featured on Property Casualty 360, MSN, and more. Pat has a B.A. in journalism from Michigan State University.
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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