Hurricanes and Home Insurance Guide

Originally published on Insurance.com.

With peak hurricane season upon us, now is a good time to check your homeowners insurance to make sure you’re properly protected before a friendly-sounding storm hits your area and leaves you with a damaged or destroyed home.

Hurricane season runs from June through November and peaks between August and October. Recent storms have destroyed entire communities along parts of the East Coast and Gulf Coast. Hurricane Katrina in 2005 caused more than $41 billion of damage and destroyed portions of Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee. But it’s not just the south that can get nailed by a powerful hurricane.

Hurricane Sandy racked up nearly $19 billion in damage that stretched from North Carolina all the way up the east coast to Maine in 2012.

Those are the big storms, but it’s not only the major hurricanes that can damage a home. Insurance Information Institute reported there were 11 tropical storms and four hurricanes in the Atlantic basin during the 2015 hurricane season.

Don’t wait until a hurricane is headed your way to look into your home insurance protection. Insurers are not going to allow homeowners to buy new or additional insurance if there is already a hurricane watch so make sure you have the right insurance protection now.

The good news is that most homeowners insurance policies cover for hurricanes except for flood. You’ll need a separate flood insurance policy for flood coverage.

However, if you live in an area prone to hurricanes, such as along the East Coast or Gulf Coast, an insurer may exclude coverage for hurricane damage, such as because of wind damage, in the standard homeowners insurance policy or may limit coverage.

If this is the case, you could shop around to see if other insurers in your area will cover you for hurricane damage. You could also see if your current insurer would add windstorm coverage to your policy.

Hurricane insurance: What does it cover?

There is nothing specifically called “hurricane insurance.” Most standard homeowners policies will cover damage caused by hurricanes except for flood damage. But those who live along the East Coast or Gulf Coast, which is where hurricanes most often occur in the U.S., may need to buy an additional windstorm coverage policy.

You would also need to buy a separate flood insurance policy. A common misconception is that a homeowners policy covers flood damage. It doesn’t. See the flood insurance portion of this page to find out more.

Hurricane insurance deductibles

The vast majority of homeowners who are interested in hurricane insurance live along the East Coast or Gulf Coast – and those 19 coastal states and District of Columbia are also where you’ll find hurricane deductibles.

The 19 states that have hurricane deductibles are:

• Alabama
• Connecticut
• Delaware
• Florida
• Georgia
• Hawaii
• Louisiana
• Maine
• Maryland
• Massachusetts
• Mississippi
• New Jersey
• New York
• North Carolina
• Pennsylvania
• Rhode Island
• South Carolina
• Texas
• Virginia

A hurricane deductible is not a flat fee like you normally see for other claims. If your home is damaged in a fire, for instance, you would pay a deductible, such as $500 or $1,000, before your insurer paid for damage.

With a hurricane deductible, insurers base the deductible on a percentage depending on the property’s risk. These percentages often range from 2 to 5 percent of your home’s insured value, but the percentage could reach double digits in hurricane-prone coastal areas, such as Florida.

For the hurricane deductible to kick in, your area must experience a “trigger event,” such as a hurricane warning.

If your home is insured for $200,000 and your hurricane damage deductible is 2 percent, you would need to pay the first $4,000 in damages before the insurance company begins to pay for damage. If that same home has a 4 percent deductible, that would mean you would need to pay $8,000 before your insurer paid for the damage.

The state most associated with hurricanes, Florida, has an annual hurricane deductible. This means you won’t get hit with a deductible for each storm if your home is damaged in multiple storms. Once you meet the hurricane deductible, you will only have your normal home insurance deductible.

You can find out the deductible percentage for storm damages by checking your insurance policy declarations page.

Does renters insurance cover hurricane damage?

If you are renting, don’t count on your landlord’s insurance to cover your personal property. Landlords insurance will cover the physical building, but you will need renters insurance to cover damages to your belongings.

Only 37 percent of renters have renters insurance. Renters insurance pays for damages and theft to your belongings, personal liability coverage and can cover additional living expenses, such as if you can’t live in your home because of damage.

The average cost of renters insurance is $188 in the U.S., but the cost varies greatly by state depending on risk. For instance, Louisiana’s average is $246, while North Dakota is only $113. Fewer natural disasters, like hurricanes, means lower rental insurance premiums.

Unlike homeowners insurance, there is no hurricane deductible for renters. If you need to file a claim, you would need to pay your set deductible, usually $250 or $500, before your insurance company kicks in money.

Flood insurance

Floods are the number one natural disaster in the U.S. with $3.5 billion paid out on flood insurance claims annually from 2005 to 2014. The average flood claim was almost $42,000 between 2010 and 2014, according to the National Flood Insurance Program, which his run by the Federal Emergency Management Agency.

People with homes in flood zones have to purchase flood insurance, but it’s not just “risky” homes that can get flood damage.

In fact, FEMA estimates that about 25 percent of flood insurance claims come from areas that have a low-to-moderate flood risk. So, flood insurance can be an important piece of protection for those not living in flood zones.

Flooding associated with hurricanes is usually not covered in homeowner policies. Homeowners can buy additional flood insurance through a broker or agent or through NFIP.

Flood insurance covers the home, electrical systems, applicances and other building property as well as personal contents. Homeowners and condo owners can insure up to $250,000 for a home and up to $100,000 for contents. Renters can insure up to $100,000 for contents.

Here’s what flood insurance does not cover:

• Damage from moisture, mildew or mold that the homeowner could have prevented
• Money and valuable papers
• Belongings outside a home, including trees, plants, walkways, decks, fences and swimming pools
• Temporary housing if the home is inhabitable

The average cost for flood insurance is about $700 annually, but if you live in a low- or moderate-risk area, it can cost much less.

NFIP says flood insurance costs for people in low- to moderate-risk areas are:

• As low as $146 for the most basic coverage for homeowners and condo owners with a max of $425 for the maximum coverage that includes $250,000 for building and $100,000 for contents.
• As little as $50 a year for $8,000 “contents only” flood insurance for homeowners, condo owners and renters and $226 for $100,000 in “contents only” flood insurance.

If the $250,000/$100,000 coverage limits are not enough, you can buy excess flood insurance from an insurer, but you must have the base NFIP insurance first.

An important thing to know about flood insurance – you can’t wait until a storm is barreling toward you to get flood insurance. Flood insurance usually takes a month to process and you won’t be covered if you wait until a storm is already headed your way.

Wind insurance

Insurers in hurricane-prone states offer additional windstorm or wind/hail deductibles. This works similarly to the hurricane deductibles mentioned above though windstorm insurance is in addition to your regular homeowners policy. III says deductibles usually range from 1 percent to 5 percent of a home’s insured value.

Make sure to review your policy to see if wind damage is excluded in your policy. If it’s excluded, you may want to explore a separate wind insurance policy, which is usually a state insurance program. Each state has different rules and regulations and you don’t want to wait until a storm hits your area. For instance, the state of Texas won’t allow you to buy windstorm coverage if a hurricane is in the Gulf of Mexico.

The cost of windstorm insurance varies by location and risk. The annual average cost for windstorm insurance in coastal Florida is $2,600, while in Texas, it’s about $1,500.

Most wind-related claims are related to roof damage though windstorm insurance covers all exterior parts of homes and can include detached structures like garages and sheds.

One important note – if a tree crashes through your car, windstorm insurance does not cover that damage. That would go through your comprehensive car insurance.

Filing a hurricane insurance claim

You should handle filing an insurance claim related to a hurricane in the same way whether you have a hurricane deductible or not. If you notice damage, don’t wait to notify your insurance company. Take these actions:

• Document the damage through photos and/or video.
• Prevent further damage to your home by covering broken windows, for example. Not doing so could cause your insurance company to not pay for further damage caused by not taking the necessary precautions to protect your damaged home.
• Notify your insurance company immediately so they can begin the claims process.
• Keep track of your communication with your insurance company, including dates, names, conversations and contact information, but don’t have the permanent repairs done until after your insurer has reviewed the damage.
• Get repair estimates from qualified contractors in writing.

Having the right level of insurance if a hurricane hits can be key to your financial well-being. Make sure you understand how a hurricane can impact your homeowners insurance and that you are properly protected with flood insurance and windstorm insurance if your property is at risk.