Windstorm insurance: what is it and how does it work?

A standard homeowners insurance policy typically covers your home and personal belongings from wind and hail damage. However, insurance companies in high-risk coastal communities are known to exclude windstorm damage from policies if your home is considered too high risk. As a solution to this potentially massive coverage gap, some insurance companies in coastal states offer separate windstorm insurance policies that specifically cover wind and hail-related damage and nothing else.

But if your homeowners insurance policy does include coverage for wind and hail, you may have to pay a special percentage deductible before you’ll be reimbursed for a windstorm-related loss. Your insurance company may give you the option to leave this deductible off of your policy altogether for a reduced premium, but doing so would leave you without a pretty crucial piece of coverage. Additionally, you’ll likely have to get permission from your mortgage company before opting out of a wind deductible.

If you live in close proximity to the coast and you haven’t been able to find wind and hail coverage on the private market, you may be able to get coverage through your state's Beach and Windstorm Plan. These plans are similar to FAIR (Fair Access to Insurance Requirements) Plans, in that coverage is pooled by private companies but administered by the government. Texas’s TWIA (Texas Windstorm Insurance Association) and New York’s C-MAP (Coastal Market Assistance Plan) are a couple of the more notable Beach Plans. In Texas, the TWIA makes up about half of the wind insurance market in the state while private companies make up the other half.

What is windstorm insurance?

Windstorm insurance is a special type of property insurance that covers your home and personal property from damage caused by wind or hailstorms. It also may cover property damage caused by rain if a windstorm or hail flurry creates an opening in your roof or wall of your home and the rain enters that way.

Bear in mind that windstorm insurance is not a replacement for a homeowners insurance policy, it’s coverage that you may need to complement your other forms of catastrophe insurance.

When do you need windstorm insurance?

You may need windstorm insurance if your insurance company excludes wind and hail damage from your homeowners policy. If you have a mortgage on your home, your lender will likely require a certain amount of homeowners insurance including coverage against wind and hail damage. If your homeowners insurance company excludes wind damage from your policy, your lender may require you to obtain coverage for “all perils” or they’ll instruct you to buy a separate windstorm policy.

Windstorm insurance is a common type of insurance in Southern coastal communities where some insurance companies have decided to not take on the risk of insuring certain high-risk areas against wind damage. Wind coverage takes a few different forms:

• It can be purchased in conjunction with your homeowners insurance and added to your policy as an endorsement with a separate wind or hurricane deductible

• It can be purchased as a “wind-only” policy through your current homeowners company, a state Beach Plan like the TWIA in Texas, or an insurer that specializes in oft-excluded perils

• It can be purchased as an “excess” policy if the coverage limits in your government wind policy aren’t high enough and you need additional protection.

Wind insurance providers will typically require a coverage “minimum” for your home. That means you must buy at least X amount of coverage in order to get a policy. Orchid Insurance, a company that specializes in different types of catastrophe coverage, requires a minimum of $250,000 in coverage in most states, according to their website.

If you live in any community close to the beach on the Atlantic coast, it’s likely that your homeowners insurance will at least have a separate wind or hurricane deductible, but it’s also possible that windstorm and hurricane damage will be listed as an exclusion in your policy. If that’s the case, it’s highly advised that you get windstorm insurance.

Where do you need windstorm insurance?

Here’s a list of states where insurance companies are permitted to charge separate wind or hurricane deductibles or exclude windstorm from coverage in certain counties. We also included links to each state’s Beach Plan.

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How do you get windstorm insurance?

In short, you can get windstorm insurance in one of two ways: through private companies or through a state-administered insurance pool like a Beach Plan. Beach Plans are usually only offered in counties specified by your state’s department of insurance and some plans, like New York’s C-MAP, require proof that you’ve been turned down by at least three companies before they’ll insure your property.

Beach Plans, like FAIR Plans, are in some cases last-resort policies if you’ve been turned down by private companies and need insurance ASAP. However, a few states offer wind coverage even if you haven’t been turned down on the voluntary market. Beach Plans are sometimes referred to as “wind pools”, as private insurance companies admitted with the state work together to keep the program active.

Generally speaking, state-administered wind insurance is easier to qualify for than private wind coverage, but it’s also more expensive and has lower coverage maximums, so there’s a chance you’ll need to obtain excess wind insurance to supplement your Beach Plan.

How much does windstorm insurance cost?

The amount you pay for windstorm insurance, like standard homeowners insurance, is determined by your home’s age, location, condition, and the amount of coverage on the property.

Homeowners insurance rates in coastal communities are generally among the highest in the country, but you’ll also pay more in premiums if you live in states that experience high incidences of tornadoes, like Oklahoma and Kansas.

In fact, premiums are generally far higher for Tornado Alley states than certain coastal states like Vermont and Delaware. Below is a list of states and their average annual premium in 2017, according to the Insurance Information Institute.

How do windstorm deductibles work?

A windstorm deductible, also known as a wind/hail deductible, is the out-of-pocket amount that you pay on homeowners insurance claims involving wind and hail damage before your insurance company will cover the remaining amount. Windstorm deductibles are common on the Atlantic Coast and in tornado-prone Midwestern states and Tornado Alley.

Depending on your state’s insurance regulations and where you live, your company may be able to charge separate wind deductibles and a more expensive hurricane or “named storm” deductible. Most states have rules in place for what can “trigger” a hurricane deductible. For example, a hurricane watch or warning may have to be issued by the National Weather Service and only last up to 72 hours after the watch or warning ends.

Windstorm deductibles are usually listed as a percentage of your home’s coverage limit (typically 1–10%), not a fixed dollar amount. In other words, if your home is insured for $300,000 and you have a 5% wind deductible, $15,000 would be coming out of your pocket before you’d be reimbursed for a wind and hail claim.

You choose the deductible amount based on what you think you can afford, and the amount will be indicated on your policy’s declarations page.

Some insurers may also offer alternative deductible options based on your needs. You may be able to pay a higher premium in exchange for, say, a fixed $2,000 deductible, or you may be able to lower premiums in exchange for a far higher fixed deductible, like $10,000.

How to reduce windstorm damage

There are certain areas of your home that are more susceptible to windstorm damage than others, such as your roof, windows, doors, patios, and landscaping. In order to prevent wind and debris from turning parts of your home into access points for water and further damage, you should take the following steps:

• Trim branches and trees

• Secure outdoor furniture or anything that may act as potential debris

• Consider installing a disaster-proof garage door

• Install storm shutters or put plywood over your windows and glass doors prior to a tropical storm

• Consider getting impact-resistant storm shingles installed on your roof