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A Comprehensive Guide to Hurricane Insurance

Guide to Hurricane Insurance

From June 1 through November 30, it’s the Atlantic hurricane season. Those who live in a region affected by hurricanes know that even a category one hurricane can have sustained winds of 74 miles per hour. That’s enough to damage homes significantly. Storm surges may also cause flooding and category five hurricanes can cause catastrophic damage.

If you don’t have hurricane insurance, you could end up paying for these damages out of pocket.

What Is Hurricane Insurance?

Hurricane insurance helps you cover the cost of repairing or rebuilding your property after hurricanes. Unfortunately, there isn’t any specific “hurricane insurance policy.” However, some insurers on the Atlantic coast may offer policies covering hurricanes.

When it comes to hurricanes, you can expect:

      •   flooding
      •   heavy rainfall
      •   storm surges
      •   sewer back-ups
      •   tornadoes
      •   strong winds

Since there isn’t a single hurricane insurance policy covering all the damage hurricanes may cause, you will likely have to combine insurance policies. A good hurricane insurance plan covers the two most damaging elements of hurricanes: wind and water.

Does Homeowners Insurance Cover Hurricane Damage?

Most homeowners insurance policies cover specifically named perils, such as hail storms, fire, or wind. However, there are many things that home insurance doesn’t cover. Insurers may exclude windstorm insurance if you live in an area at high risk for hurricanes. If this is the case, you may need to get an endorsement for windstorm coverage.

Besides an endorsement to your homeowner’s policy, you may get wind insurance through your state’s Fair Access to Insurance Requirements (FAIR) plans, through your state’s Beach plan, or as a separate windstorm and hail policy

FAIR plans are meant to be a last resort for hurricane insurance through a state-run pool. Beach plans are similar to FAIR plans but are only available in certain coastal communities in the Atlantic and Gulf states.

Examples of Beach and FAIR plans include:

      •  The Alabama Insurance Underwriting Association Beach plan offers wind and hail protection policies for homes, condos, mobile homes, and commercial businesses.
      •  The Texas Fair Access to Insurance Requirements Association is a FAIR plan that offers wind and hail coverage to eligible homeowners. Fourteen coast communities and five communities in Harris County have access to wind and hail coverage.

Homeowners’ insurance does not cover flood damage either, so you’ll need flood insurance to protect your home and assets from storm surges. If you live in a participating area, you may receive flood insurance from the federal government’s National Flood Insurance Program.

Does Renters Insurance Cover Hurricane Damage?

Similar to homeowners insurance, most renters’ insurance policies do not cover flood damage. While residents who live on higher levels may not care about flood insurance, those renting a house or ground-floor condo near the coast should consider buying flood insurance. Your landlord’s insurance does not cover your personal belongings.

Renters insurance may cover wind damage, although insurers in high-risk areas may exclude this coverage. Double-check your insurance policy to ensure that you are covered from all the dangers of hurricane season.

Windstorm, Named Storm, and Hurricane Deductibles

Homeowners insurance usually offers wind and hail deductibles. Residents in 19 states must pay a deductible before an insurer covers hurricane damage. This amount is typically a percentage of the residents’ home value. The states are:

      •   Alabama
      •   Connecticut
      •   Delaware
      •   Florida
      •   Georgia
      •   Hawaii
      •   Louisiana
      •   Maine
      •   Maryland
      •   Mississippi
      •   New Jersey
      •   New York
      •   North Carolina
      •   Pennsylvania
      •   Rhode Island
      •   South Carolina
      •   Texas
      •   Virginia
      •   Washington, D.C.

Insurers may impose windstorm, named storm, and hurricane deductibles on home and renters policies. Although these deductibles sound the same, there are key differences:

      • Windstorm: Sometimes referred to as a homeowners insurance wind and hail deductible, the windstorm deductible applies to damage caused by hurricanes, tornadoes, and other strong winds.
      • Named Storm: This deductible will usually go into effect if your home is damaged by a hurricane that’s been named by the National Weather Service or the National Hurricane Center. Any other strong windstorm or tornado will not trigger this deductible.
      • Hurricane: A homeowners insurance hurricane deductible is only applied when a storm has strong enough winds to be classified as a hurricane rather than a tropical storm or depression.

Home insurance deductibles are typically a flat dollar amount, like $1,000, whereas wind, named storm, and hurricane deductibles are usually a percentage of your home’s value. The percentage may range from 1% to 5%, though high-risk coastal areas may have higher percentages.

How Much is Hurricane Insurance?

The cost of hurricane insurance depends on various factors, including:

      •   Your location
      •    The hurricane risk
      •   The age of your home
      •   How much coverage you purchase
      •   Your deductible amount

The average cost of homeowners insurance in the US is $1,015 a year. Flood insurance from the National Flood Insurance Program (NFIP) costs an average of about $730 per year.

Some coastal owners may add wind coverage as well, which can be expensive. The average cost (and requirements) of windstorm coverage vary among states. For example, the Texas Windstorm Insurance requirements include:

      • Applicants must have been refused coverage by at least one authorized insurer
      • Properties located in flood zones that were altered in any way on or after September 1, 2009 must provide proof of flood insurance coverage
      • Properties must meet applicable building codes

Tips for Buying Hurricane Coverage

      1.   If you are buying home, flood, or windstorm insurance, or a combination of all three, ensure that you have enough coverage to pay the full price of rebuilding your home and replacing your possessions.
      2.   Don’t procrastinate. Most insurance policies have a 30-day waiting period before coverage actually takes effect. This means you can’t suddenly get insurance three days before a hurricane hits.
      3.   When it’s renewal time, you can save money by comparing quotes to find a lower rate.

Frequently Asked Questions

Does Hurricane Insurance Exist?

Well, no. Hurricane insurance is really a combination of windstorm, flood, and homeowners insurance.

Do I Have to Get Flood Insurance Through NFIP?

You can also get private flood insurance from private companies. Private insurance typically provides more comprehensive coverage, especially if you have a high-value property. However, if you have coverage through NFIP, it won’t be canceled.

Who Pays for Hurricane Damage?

That depends on what caused the damage. If a hurricane’s powerful winds rip your roof off, your home or windstorm policy covers that damage. If your house is flooded, your flood insurance will reimburse you.

Featured Image: Megapixl

About the author: A resourceful, enthusiastic and organized lead financial news writer with over seven years of experience writing news (articles, stock updates and analysis, editorials, research reports), marketing content (landing pages, press releases, mailers, investor decks, creatives), website copy, interviewing, social media and SEO strategies, website design and copy editing.

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