Hurricane season runs from June 1st to November 30th. Those of us that live here in the SouthEast need to pay attention for developing storms in these months – and make sure our risk of financial impact from hurricanes is properly covered.
Do you understand the type(s) of insurance you need to minimize financial risk from a hurricane? Does your current insurance have a deductible, and what is it? Do you need wind and/or flood insurance?
Let’s get into these topics to help you understand and assure proper coverage for your belongings.
What is a Hurricane Deductible?
Hurricane insurance coverage is a combination of homeowners insurance / condo insurance, flood, and windstorm insurance. Most homeowners insurance policies cover hurricane damage except flood damage. But in order to be fully protected for a hurricane, you’ll need all three types of insurance.
People who live in 19 states along the East Coast and Gulf Coast have to pay a hurricane deductible.
The hurricane deductible is an extra deductible on top of your home, condo, or renters insurance.
When your insurer approves your claim, it gives you money to pay for repairs or replacement costs minus your deductible. You pay the deductible, which is your share of the costs.
States With Hurricane Deductibles
There are 19 states and District of Columbia that have hurricane deductibles:
- New Jersey
- New York
- North Carolina
- Rhode Island
- South Carolina
A hurricane deductible is different from your regular home insurance deductible. And while a home insurance deductible is a flat fee, a hurricane deductible gives your home a risk percentage.
An insurer does this by taking into account the risk of your location. These percentages are usually between 2 and 5 percent of your home’s insured value. Then the homeowner pays that percentage when you need repairs after a hurricane.
If you live along the coast or in an area where hurricanes are common, you can expect to pay a higher percentage. If you live inland, you will likely pay less.
Places like the Florida coastline can have hurricane deductibles that are more than 10 percent.
The Sunshine State also has an annual hurricane deductible. This means you have to cover just the annual deductible regardless of how many hurricanes damage your home in a year.
If you’ve reached your annual hurricane deductible in Florida, then you pay your regular home deductible, which will likely be less than the hurricane deductible.
Where do you find your hurricane deductible percentage? Check your insurance policy’s declarations page.
Do Renters Have Hurricane Deductibles?
Renters don’t have hurricane deductibles.
Renters insurance covers personal property like furniture, clothes, TVs, and electronics. But it doesn’t cover the physical structure of the building. This means you don’t have as much to lose so the insurer doesn’t see it as much of a risk as a home.
If renters have personal property loss, they would pay the normal renters insurance deductible.
When is the Hurricane Deductible in Effect?
The hurricane deductible comes into effect any time there is a “trigger event.” Your state would likely say a hurricane warning is a trigger event. At that point, damage caused during that storm would include the hurricane deductible
What is Windstorm Insurance?
Insurers may not cover wind damage for homes in high-risk areas. In that case, homeowners need to buy additional windstorm insurance to protect against wind damage.
Windstorm insurance covers exterior parts of homes and detached structures, such as roofs, siding, windows, garages, and sheds. Windstorm insurance usually kicks in when there is damage caused by winds that are more than 35 mph.
Separate windstorm insurance has a deductible like your home insurance. It’s either a dollar amount or percentage of your home’s insured value.
Does your home insurance cover you? Check your insurance policy and see if your policy excludes windstorm damage.
If it’s excluded, you’re likely in a high-risk area, such as along the coast.
What is Flood Insurance?
A major hurricane can destroy your home with its powerful winds and floodwaters. Floods are not covered in home, condo, or renters insurance policies. In order to get covered, you need to take out a separate flood insurance policy
Floods are the number one natural disaster in the United States. People who live in homes in flood zones must purchase flood insurance.
It’s a good idea to look into flood insurance regardless of where you live. Why? The Federal Emergency Management Agency says that about one-quarter of flood insurance claims are from places that are in low-to-moderate flood risk areas.
The National Flood Insurance Program (NFIP), a government program, administers flood insurance.
Don’t wait to get flood insurance. You need to have flood insurance in place at least a month before you can get covered. So, if there is a storm barreling toward your area, it’s too late to get a policy.
That’s why it’s a good idea to think about flood insurance before you need it.
3 Questions to Ask Yourself About Hurricane, Windstorm, and Flood Insurance?
1. Do I live in a state with a hurricane deductible?
Most states don’t have a hurricane deductible. So, if you live in a state without that kind of deductible and a hurricane damages your home, you will go through your regular home insurance. You will pay your normal home deductible.
If you live in one of the 19 hurricane-prone states with a hurricane deductible, you’ll pay that deductible instead of your home deductible. This is important because your hurricane deductible is most likely going to be higher than your regular home insurance.
2. Is windstorm damage covered by your home insurance?
If you live in a high-risk area, such as along the coast, your home insurance policy may not cover windstorm damage. You’ll want to check your policy to see if it’s excluded from your policy.
3. Do I need flood insurance?
Your home insurance will not cover you if a flood damages your home or belongings.
More than one-quarter of flood damage happens in areas that are not usually prone to floods. So, it’s a good idea to find out how much flood insurance costs for your home.
Shopping for Windstorm and Flood Insurance
Windstorm insurance is either offered by your state or through insurance companies. Check with your insurance company to see how to buy windstorm insurance in your state.
Flood insurance is a federal program that you can buy through the NFIP or a registered broker.
Unlike home and auto insurance, you don’t have to shop around for flood insurance. Your flood insurance cost will be the same regardless of how you get it. The flood insurance program gets your insurance cost based on your home’s risk.
There are dollar limits on flood insurance coverage. If you need to buy excess flood insurance, you can buy it through an insurer. You just need to have an NFIP insurance policy first.
Are You Adequately Covered?
Performing a risk analysis and insurance review is one of many financial planning services provided for clients. If you aren’t sure what your various risk areas are, or whether you are properly covered, let’s chat about it. You can schedule a 15-minute call online to talk about your concerns and how I might be able to help out.