The National Oceanic and Atmospheric Administration (NOAA) is predicting an above-average hurricane season for 2022, with the possibility of up to 21 named storms and six major hurricanes. Factors like global warming may be causing hurricanes to grow in intensity and frequency, which means homeowners along the coast should understand how their home insurance coverage reacts to these storms. Some types of hurricane damage are not covered by standard home insurance policies. To fill gaps in coverage, you might need to consider getting other kinds of coverage, like flood insurance, to protect your home in the event of a hurricane.
In the news
On September 26, Tropical Storm Ian officially became Hurricane Ian. The storm is set to make landfall on Florida’s Gulf Coast on Wednesday as a Category 3 hurricane. The entire state is under an emergency declaration, although the Western counties are expected to see the worst impacts.
Ian is a “rapidly intensifying” storm, which the National Hurricane Center defines as an increase in wind speeds of about 35 mph or more during a 24-hour period. In layman’s terms, this means that Ian is getting stronger very quickly, and Floridians should prepare for a damaging storm. In addition to high winds, Ian is also predicted to slow down its forward motion over Florida, meaning it could sit and spin on top of the state, increasing the risk of wind damage and flooding. While predictive models can be helpful, it’s also important to note that hurricane situations — and especially this storm — can change rapidly.
It’s time for Florida homeowners to prepare for the worst, even while hoping for the best. Stay on top of the news, prepare your home and consider evacuating. Be sure to prep an emergency kit and include all family members, including pets, in your evacuation plan.
How much hurricane coverage do you need?
Insurance companies don’t sell standalone “hurricane insurance policies,” so you will need to rely on your home insurance policy and some supplemental policies, like flood insurance, to get adequate coverage. Depending on your circumstances or preferred degree of financial protection, you may need to consider higher coverage limits or coverage add-ons to your policy, above what a standard HO-3 or HO-5 policy provides. Most homeowners policies provide financial protection for:
- Your dwelling (the structure of the home)
- Detached units (like a shed or detached garage)
- Personal property (your belongings)
- Living expenses if you are displaced
Dwelling coverage covers the structure of your home, your roof, attached structures and built-in appliances such as your water heater or kitchen cabinets. You generally buy this coverage equal to the total rebuild cost of your home. Because hurricane damage can be expensive, you might consider purchasing higher dwelling coverage limits, or purchasing endorsements, like guaranteed replacement cost coverage for the structure of your home.
Other structures coverage
Other structures coverage pays to repair or replace detached structures on your property, including garages, sheds, barns, gazebos and more. This coverage is based on a percentage, generally 10%, of your dwelling coverage limit. For example, if you have $400,000 in dwelling coverage, you may have up to $40,000 in coverage for detached units.
Personal property coverage
Personal property insurance covers your personal items, like clothing, furniture and appliances. Generally, the limit for personal property coverage is a percentage of your dwelling coverage limit. Many insurers provide personal property coverage of 50% to 70% of your home’s insured value, according to the Insurance Information Institute (Triple-I).
If you live in a state where hurricanes are common, it’s important to make sure you have enough personal property coverage. For the highest amount of protection, consider insuring your belongings at their replacement cost value instead of their actual cash value so you can replace them with new items of equivalent value.
Additional living expenses
Homeowners insurance helps pay for additional living expenses if you get temporarily displaced after a covered loss, like a hurricane. Your policy may reimburse you for the cost of hotel and food expenses while your home is being repaired. The coverage limit for additional living expenses is sometimes a default amount set by the insurance company, but you might have the option to increase the limits for more protection.
How do hurricane deductibles work for homeowners insurance?
If your homeowners insurance does cover for wind damage or other hurricane damage, then claims may be subject to a separate deductible. These deductibles are typically higher than standard homeowners insurance and set as a percentage – usually 1% to 5% – of your dwelling coverage. For example, if you are covered for $400,000 and your hurricane deductible is 5%, then you may have to cover a $20,000 deductible.
Do you need a hurricane deductible?
Almost every state on the Atlantic coast allows insurance companies to require a separate hurricane deductible. It is possible that you may have the option to pay a higher premium to lower your fixed deductible.
Hurricane deductibles are usually triggered by an official hurricane ruling from the National Weather Service, but can vary slightly by state and insurance company. While hurricane deductibles may be costly, the coverage is essential protection for those in high-risk areas for hurricanes.
What states have hurricane deductibles?
Nineteen states and Washington, D.C., have hurricane deductibles:
- New Jersey
- New York
- North Carolina
- Rhode Island
- South Carolina
- Washington, D.C.
Additional hurricane coverage options to consider
Some homeowners may be surprised to learn that flooding — even from a hurricane — is generally not covered by a standard homeowners insurance policy. This is why many lenders require homeowners to carry flood insurance if they have a mortgage. One of the most common ways to get flood insurance is through the National Flood Insurance Program (NFIP).
NFIP policies provide up to $250,000 in dwelling coverage and $100,000 in personal property coverage for residential homes. Before your coverage takes effect, there is a 30-day waiting period, except in a few rare circumstances. Additionally, NFIP flood insurance premiums must usually be paid for upfront and in full, rather than in monthly increments. Many private carriers also offer flood insurance now as well, and the waiting periods may differ from NFIP-backed policies.
More than 20% of flood claims come from properties outside high-risk federal flood zones, according to FEMA. Because of this, it may be better to err on the side of caution and buy flood insurance if your area is at all subject to flooding. Otherwise, you could be stuck with the entire bill if your home is damaged by water, says Sara Singhas, director at the Mortgage Bankers Association.
Water backup coverage
Sewage overflow is not something you want to think of after a hurricane, but it could happen as a result of flooding. Water backup coverage helps protect your home and personal property from water damage if sewage water backs up into your home through your plumbing or sump pump.
Debris removal coverage
Homeowners insurance generally covers debris removal if, for instance, a tree falls on your property. However, the coverage usually only goes up to a certain amount. Debris removal following a hurricane can easily exceed that cap so you may want to check if your insurer offers a coverage endorsement to increase your debris removal reimbursement.
How to be prepared to make a home insurance claim after a hurricane
To prepare for an insurance claim after a hurricane, there are several things you can do. Take photos and videos of the interior and exterior of your home routinely (every six months to a year) to document what your home looks like and what is in it. If you have done major renovations or repairs, make an inventory of that, too, and upload all of the documentation to the cloud so you can access it remotely, Moss says.
After a storm, it could take time for an insurance adjuster to inspect your home so document everything again as soon as you can. Moss advises having your own documentation can help your insurer process your claim more quickly and resolve potential claim disputes.
Do I need the same coverage if I rent or own a condo?
When it comes to hurricane protection, renters insurance policies are just as important as homeowners policies are, but for two different circumstances. If you live in an apartment, your landlord insures the building, but you still need to carry insurance for your possessions and additional living expenses.
If you own a condo, find out what areas are covered by the association and what you will need to insure. In addition to your personal items, it is possible that you may be responsible to help pay for a portion of the repairs to the damaged structure. Check with your association attorney or property management company before you buy and find out exactly what type of coverage you will need.
Fortunately, there is typically no hurricane deductible for renters insurance policies – only the standard deductible.