What You Need to Know About Hurricanes and Insurance Coverage

Homeowners cope with the destruction from Hurricane Laura.
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Every year weather disasters cause billions of dollars in damages. Hurricane season runs from June 1 to November 30 causing serious damage from falling trees, flying branches, severe rainfall, and flooding risks for property owners. 2020 is predicted to be an extremely active season with a forecast of 12 hurricanes, and 24 named storms. As a result, there are over 7 million homes at risk for hurricane damage from storm surges alone by 2021.

So, how can you best protect yourself? If you are a homeowner or a renter in a coastal region, having insurance coverage for damage from hurricanes helps. Learn what you need to know about hurricane insurance to get the right coverage.

What Is Hurricane Insurance?

Hurricane insurance is made up of a combination of a few different insurance coverages. There is no such thing as a stand-alone "hurricane insurance" policy. Instead, you can get coverage for damage from hurricanes by combining homeowners insurance, flood insurance, and various endorsements like sewer-back up, or windstorm coverage (in some states).

What Does Hurricane Insurance Cover?

Based on the combination of coverages you decide to buy, hurricane insurance can cover you for damages arising from wind, heavy rainfall, flooding, tornados, storm surge, and other weather-related perils.

These types of insurance will cover different damages that result from hurricanes:

  • Homeowner insurance: A standard homeowners insurance policy covers your home's structure from damage that results from many risks, including hurricane or wind, as well as lightning, but there are also exclusions.
  • Flood insurance: This covers flooding, storm surge, and wind-driven water, whereas home insurance does not cover these risks. Flooding is a major risk in a hurricane. Renters can purchase coverage as well.
  • Sewer Back-Up: Due to heavy rains, your home could have a sewer back up. This can also be a result of a hurricane and extreme weather. Many home insurance policies exclude this. You can ask to add this coverage to your policy as an endorsement if it is not covered automatically.
  • Additional Living Expense (ALE) Coverage: Homeowners, renters, or condo insurance policies include coverage for additional living expenses. This is important because if a covered risk destroys your home, you will need to live somewhere temporarily. Additional living expenses help cover some of the increased costs of living while your home is being rebuilt. Policies usually come with a limited amount of coverage, so be sure and ask if there are options to purchase higher limits. You may need more than standard ALE if you are recovering from a major hurricane loss.

There is no one kind of coverage known as hurricane insurance. Instead, you must rely on a combination of different coverages. Even in cases where the hurricane damage is covered on a home policy, beware that there are also exclusions of coverage. Depending on where you live, you could also have very high deductibles for named storms, hurricanes, or windstorms that will limit how much money you get in a claim.

What Doesn't It Cover?

Many people don't realize the limitations of their homeowners insurance policy when it comes to hurricanes. If you only have a basic insurance policy, many things are not covered in your home policy.

Damage from wind-driven waters or storm surge and flood is excluded from a homeowners policy, even if caused by a hurricane. For the past four years, hurricanes have caused above-average flooding. Buy a flood insurance policy if you want coverage for this. 

Home insurance offers different claims settlement terms. If you do not have replacement cost coverage on your home, or if you did not insure your home to value, then you will not get enough money when you claim to rebuild your home. For example, if your home is worth $100,000 to rebuild, but you only insured it for 75% of its rebuild cost with a 1% deductible, and you find out you do not qualify for replacement cost, the claim payment would be: $75,000 less the deductible of $750, less the depreciation (actual cash value settlement), for a total of $44,250 (instead of $100,000).

If you live in certain states, you may have some form of a hurricane or "named storm" deductible. This means that the deductible you will have to pay due to a hurricane or named storm can range from 1% to 10% of your building value.

If you live in a condo, your condo insurance will not cover the building that your unit is in. Ask your condo association what is covered on the building policy to know what your responsibilities are vs. theirs.

If you have personal property of high value, or even collections or sports equipment, check your special limits of insurance to see what is covered or not. Special limits restrict coverage for certain items.

Be sure and ask your insurance representative to go over what is covered and what is not in your policy.

There are at least 19 states that have some form of named storm or hurricane special deductibles. In these states, even with hurricane coverage, the deductible can be as high as 1% to 10% of the building value, so even if you have hurricane insurance you may have to pay high out-of-pocket amounts before being covered.

How Much Does Hurricane Insurance Cost?

The average cost of hurricane insurance will start between $1,971 and $2,161 in zones of low to moderate risk (for average homes where wind is not excluded from the home insurance policy).

We based our estimates on the following data:

  • The average cost of homeowner insurance in the U.S. is $1,211
  • The average cost of flood insurance in 2019 was $700, according to FEMA
  • The average cost of sewer back-up insurance was estimated (conservatively) between $50 and $250 per year

States in coastal regions have the highest costs of home insurance, so the average premiums will be several hundred to a couple of thousand dollars more, based on location alone. For example, the base cost of home insurance in Louisiana is an average of $1,968, Florida is $1,951, and Texas is $1,893 (instead of the national average of $1,211). You then have to also consider the cost of windstorm insurance. For example, inTexas, the average cost of wind insurance from the Texas Windstorm Insurance Association is $1,600.

The real cost of coverage will vary greatly depending on the square footage of your home, your location, the elevation of your home, and many other factors. Choosing higher deductibles and qualifying for discounts are good ways to keep your costs low. Finding an insurance company that offers better homeowner coverage and higher policy limits will ensure you get paid more in a claim.

Can You Buy Last Minute Hurricane Insurance?

You can not usually buy a storm policy once a storm has appeared or there is a storm warning in effect. Storm policies also have waiting periods. For example, when buying flood insurance, there is usually a waiting period of 30 days.

Don't leave your insurance to the last minute or you may not be able to get coverage.

What About Windstorm Coverage?

If you live in a high-risk zone the coverage on your standard home policy may exclude or limit windstorm and hail coverage. Areas that are prone to hurricanes (and also tornadoes) have exclusions for wind damage. In these cases, you have to buy windstorm insurance if you want damage caused by the wind and hurricanes to be insured.

Homeowner policies may also have a windstorm or hurricane deductible. The insurance company will define what kind of event triggers the hurricane or windstorm deductible to apply. Often it is the speed of a storm, or whether it has been named or not.

There are 19 states, plus Washington D.C., that have windstorm and hurricane deductibles. These states include (but are not limited to) Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia, and Washington D.C. In these states, the amount of the deductible is set by the insurance company, in most cases. Florida regulates the amounts.

Key Takeaways

  • Hurricane insurance is not a stand-alone policy, it is a combination of two or more types of insurance, usually including homeowners insurance, flood insurance, and sometimes windstorm insurance.
  • To be paid enough from a claim to rebuild your home, you need to insure your home to value and ask for replacement cost coverage (hurricane coverage does not guarantee replacement cost if not specified).
  • Hurricane insurance can not be bought at the last minute, so you need to buy coverage as soon as possible because waiting periods may apply.
  • Some states cover wind and hurricane damage on a homeowners policy, while others exclude it or may have very high deductibles.
  • Hurricane insurance is not only for homeowners—renters can also benefit from coverage.

Article Sources

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