Hurricane Insurance: Understanding Coverage and Exclusions
As hurricane season approaches, it’s essential for homeowners in high-risk areas to review their insurance policies and ensure they have adequate coverage. Hurricane insurance is not a single policy, but rather a combination of coverage options that protect against damage from hurricanes and other natural disasters.
What is Hurricane Insurance?
Hurricane insurance is not a specific type of policy, but rather a term used to describe the coverage options available to homeowners in hurricane-prone areas. These options typically include a hurricane deductible on a homeowners insurance policy, which is an extra amount the homeowner must pay before the insurer will cover damage or destruction caused by a hurricane. The deductible is usually a percentage of the property’s value, ranging from 2% to 5% of the insured value.
In addition to the hurricane deductible, homeowners may also need to purchase separate flood insurance and windstorm insurance policies to cover damage from flooding and high winds.
Understanding Hurricane Deductibles
Hurricane deductibles are separate from regular homeowners insurance deductibles and are based on a percentage of the home’s value. While a regular homeowners insurance policy deductible is a fixed dollar amount, a hurricane deductible might be 2% to 5% of a home’s insured value.
For example, if a home is insured for $200,000, a 2% hurricane deductible would be $4,000. This means the homeowner would need to pay the first $4,000 of damages before the insurer would cover the remaining costs.
States Where Hurricane Deductibles Apply
Hurricane deductibles apply in 19 states and Washington D.C., including:
- Alabama
- Connecticut
- Delaware
- Florida
- Georgia
- Hawaii
- Louisiana
- Maine
- Maryland
- Massachusetts
- Mississippi
- New Jersey
- New York
- North Carolina
- Pennsylvania
- Rhode Island
- South Carolina
- Texas
- Virginia
- Washington D.C.
Policies Offering Hurricane Coverage
Homeowners insurance policies in hurricane-prone areas typically offer some level of hurricane coverage. However, it’s essential to review the policy to ensure it provides adequate coverage for the structure of the home, as well as additional living expenses and personal possessions.
- Standard Homeowners Insurance: Covers the structure of the home for disasters such as hurricanes and windstorms.
- Flood Insurance: Covers damage from flooding, which may be excluded from standard homeowners insurance policies.
- Windstorm Insurance: Covers damage from high winds, which may be excluded from standard homeowners insurance policies.
Exclusions and Limitations
Homeowners should be aware of the exclusions and limitations in their policies, including:
- Flooding: Typically excluded from standard homeowners insurance policies, flooding may require a separate flood insurance policy.
- Sewer Backups: May be excluded from standard homeowners insurance policies and flood insurance policies, requiring a separate sewer backup insurance policy.
- Time Limits: Additional living expenses (ALE) coverage may be limited to a specified amount of time.
Preparing for Hurricane Season
To ensure adequate coverage, homeowners should:
- Review their policies: Understand the coverage options and exclusions in their policies.
- Check their deductibles: Ensure they have sufficient funds to cover their hurricane deductible.
- Create a home inventory: Document their personal possessions and their value to ensure adequate coverage.
- Consider additional coverage: Purchase separate flood insurance and windstorm insurance policies if necessary.
By understanding hurricane insurance coverage and exclusions, homeowners can ensure they are adequately protected against the financial impact of a hurricane.
