Hurricane Insurance: How To Fully Cover Your Home
One of the biggest misconceptions that homeowners have is that their homeowners policy will completely protect them from damage due to Hurricanes. Depending upon how your policy is structured, your home may not cover you completely from the destructive effects of Hurricanes.
Hurricane Irene caused extensive damage all along the east cost as far north as Vermont. Many homeowners were surprised to learn that they either weren't fully covered or owed a large deductible of up to 10% of the replacement value of their homes depending upon the level of risk in their area. This deductible ran up to several thousand dollars on average. Due to the large number of claims from prior hurricanes, insurance companies were allowed to add this deductible. This essentially means that the first several thousand dollars would be your responsibility before your homeowners insurance kicks in. These special hurricane deductibles kick in when home damage occurs while the warning is in effect or within 24 hours after the termination of the last hurricane warning issued for the area where a property is located.
Also, standard homeowners insurance will not cover flood damage unless the water entered the home due to the effects of wind first. So, if your roof was damaged initially by wind or falling trees, then any water damage caused by water entering the home typically is covered under your standard homeowners policy.
Windstorm Insurance Coverage
Another layer of insurance coverage that you can add to supplement your homeowners is Windstorm Insurance Coverage. This covers damage due to excessive winds (typically Category 2 or higher) that exceed the levels covered by standard homeowners insurance policies. In some higher risk areas, this coverage is mandated by state or local regulations. Windstorm insurance is partially or, in some highest risk areas, fully subsidized by state government backed insurance companies. For example, Citizens Property Insurance Corp. is the windstorm coverage of last resort for those deemed uninsurable or highest risk to windstorm damage in Florida. This partial or full subsidy allows this additional coverage to exist and helps to lower deductibles.
These deductibles vary widely depending upon your location AND the insurer. If you own a home in a region where hurricanes are likely, then you definitely must review your insurance company's windstorm/hurricane deductible. If you don't know what it is, then contact your insurance company or state insurance commissioner office. An example of how different these deductibles can be is shown in this list of approved homeowners windstorm deductibles for New York State. You can see that deductibles vary from as low as $500 and 1% all the way up to 5%. Flat deductibles of up to $25,000 are also noted.
It's important to shop around for coverage from competing insurance companies to see which has the lowest windstorm deductible in your area for the least premium. Compare any quoted rates and deductibles to your current provider.
Flood Insurance
A final necessary component of hurricane coverage is flood insurance. Flood insurance is a rider to your homeowners insurance that is provided by the National Flood Insurance Program (NFIP). The NFIP provides coverage at varying rates to communities in exchange for their participation in the program. Participating communities agree to adopt and enforce ordinances that meet or exceed FEMA requirements to reduce the risk of flooding. Homeowners policies (including windstorm) do not cover damage due to widespread flooding caused by hurricane storm surge of overflowing rivers and streams. Any water damage must be due to damage from low level winds, trees falling or some other external force that allowed the water to enter the home for it to be covered. Is it the flood or the wind that caused the damage? Many disagreements with insurance companies are due to this question alone!
You can avoid this costly problem by contacting your insurance agent for more information about flood insurance through NFIP or go to floodsmart.gov to get your risk profile and find out about getting flood insurance for your home.
So, What do I need to cover myself as much as possible against hurricane damage?
These are the three pillars of insurance coverage
- Get a comprehensive homeowners policy in place.
- Add a Windstorm Insurance Rider (Very Important to compare windstorm deductibles from all companies offering you a quote!)
- Get Flood Insurance via the NFIP through your agent or floodsmart.gov
If you do all three , then you will be as covered as possible for hurricane damage to your home. Full coverage may be expensive but it will limit your out of pocket charges and ensure that you can repair or rebuild your home if disaster strikes.
Want to compare homeowners insurance rates and get the best deal?
If you would like to compare homeowners insurance rates with windstorm coverage with your current insurance company, then we suggest that you compare policies and rates from as many insurance companies as you can prior to buying a policy or switching companies. We recommend Insureme who allows you to compare several home insurance policies from major highly rated insurers. They are also unique in that they include quotes from dozens of local insurance agents in your area. In many cases, independent agents may be able to give you a better deal for becoming one of their customers. Be sure to mention that you are interested in adding a windstorm damage rider.
This should not be considered financial advice which can only be given by a qualified financial or insurance professional. We suggest you consult with a licensed financial planner and/or insurance professional who is most qualified to consult with you regarding policy decisions. Many factors are involved in your policy premium and coverage due to hurricane and storm damage, some of which may not be mentioned in this article. We are an affiliate of the Bankrate Insurance Network.
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