Does homeowners insurance cover hurricane damage?
According to the NOAA, the year 2020 set a new record for natural disasters. By September, the annual, 21-name list of hurricanes had been exhausted, and for the second time in history, the remaining hurricanes were named using the Greek alphabet. In comparison to other natural disasters, a few days to a few hours of hurricane preparation could mean the difference between the amount of property damage your home sustains and even life and death.
However, preparing your home does not have to end with boarding up windows and securing items outside. Checking to see if your homeowners insurance covers hurricane damage is a good place to start. A standard homeowners insurance policy will generally cover the costs of repair from most natural disasters, but not all. Flooding caused by a hurricane and storm surges are typically excluded from standard policies. To be covered for hurricanes and flooding, you may need to purchase an endorsement or a separate policy.
With hurricane season beginning in June, you may want to start reviewing your policy. While the official start of the hurricane season is June 1, hurricanes have been forming earlier in history due to climate change. The National Weather Service considered delaying the start of hurricane season until March 15, but ultimately decided against it. However, beginning May 15, the NWS will issue routine Tropical Weather Outlooks (TWOs).
How much hurricane coverage do you need?
Depending on your circumstances or desired level of financial protection, you may need to consider higher coverage limits or coverage add-ons to your policy that go above and beyond what a standard HO-3 policy provides. Most homeowner policies cover the following expenses:
- 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
Dwelling coverage protects your home's structure, roof, and built-in appliances such as your water heater or kitchen cabinets. This coverage is typically purchased in an amount equal to the total rebuild cost of your home.
Hurricane damage is costly, and it is likely to cost more than initially anticipated. If you want to be extra cautious, inquire about extended dwelling coverage with higher limits.
Garages, sheds, barns, gazebos, and other detached structures are examples. This coverage is based on a percentage of your dwelling coverage, typically 10%. For instance, if you have $400,000 in dwelling coverage, you may have up to $40,000 in detached unit coverage.
Personal property coverage
Personal property insurance is exactly what it sounds like. It includes clothing, furniture, appliances, and other items that are not physically attached to your home.
In most cases, the personal property limit is a percentage of the insured value of the dwelling. According to the Insurance Information Institute, many insurers provide personal property coverage ranging from 50% to 70% of your home's insured value (III).
Property damage from a hurricane can be severe, but you may also require coverage for your home's contents. Hurricane winds can cause damage to more than just the structure of a house. To assist in the replacement of your home's contents, you can insure your belongings at their replacement cost rather than their actual cash value, allowing you to replace them with new items of equivalent value.
Additional living expenses
Understanding your coverage for living expenses is critical because you may be displaced as a result of a major storm. This coverage assists in the payment of additional living expenses incurred as a result of displacement following a loss. This may include hotel and food costs while your house is being repaired.
How do hurricane deductibles work for homeowners insurance?
If your homeowners insurance policy covers wind damage or other hurricane-related damage, claims may be subject to a separate deductible. These deductibles are typically higher than standard homeowners insurance and are calculated as a percentage of your dwelling coverage – typically 1% to 5%. For example, if you have $400,000 in coverage and your hurricane deductible is 5%, you may be required to pay a $20,000 deductible.
Do you need a hurricane deductible?
Almost every state along the Atlantic coast permits insurance companies to impose a separate hurricane deductible. It's possible that you'll be able to pay a higher premium in order to lower your fixed deductible.
Hurricane deductibles are typically triggered by an official hurricane declaration from the National Weather Service, but this varies slightly by state and insurance company. While hurricane deductibles can be expensive, the coverage is critical for those who live in hurricane-prone areas.
What states have hurricane deductibles?
Hurricane deductibles are available in 19 states and Washington, D.C.:
- Alabama
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Louisiana
- Maine
- Maryland
- Massachusetts
- Mississippi
- New Jersey
- New York
- North Carolina
- Pennsylvania
- Rhode Island
- South Carolina
- Texas
- Virginia
Additional hurricane coverages to consider
Flood insurance
Some homeowners may be surprised to learn that flooding, even from a hurricane, is not typically covered by a standard homeowners insurance policy. If you live in a federal flood zone and have a mortgage, you will almost certainly be required to purchase flood insurance through the National Flood Insurance Program, or NFIP, when you purchase your home.
According to the Federal Emergency Management Agency, or FEMA, which administers the NFIP, the federal program provides up to $250,000 in dwelling coverage and $100,000 in personal property coverage. If the value of your home exceeds the NFIP limit, your lender may require you to buy additional flood insurance from a private insurer, even if the federal government does not require it in a lower-risk area.
According to FEMA, more than 20% of flood claims come from properties located outside of high-risk federal flood zones. As a result, if your area is prone to flooding, it may be best to err on the side of caution and purchase flood insurance. Otherwise, if your home is damaged by water, you may be stuck with the entire bill, according to Sara Singhas, director of the Mortgage Bankers Association.
Water backup coverage
Sewage overflow is not something you want to think about after a hurricane, but it is a possibility as a result of flooding. Water backup coverage protects your home and personal belongings from water damage if sewage water backs up into your home via your plumbing or sump pump.
Debris removal coverage
Debris removal is typically covered by homeowners insurance if, for example, a tree falls on your property. However, the coverage is usually limited to a certain amount. Debris removal after a hurricane can easily exceed that cap, so check with your insurer to see if they offer a coverage endorsement to increase your debris removal reimbursement.
Regular documentation can help streamline the claims process
There are some things you can do to help streamline the claims process while also reducing stress during a crisis. Take photos and videos of the interior and exterior of your home on a regular basis (every six months to a year) to document how it looks and what's inside. Make an inventory of any major renovations or repairs, and upload all documentation to the cloud so you can access it remotely, advises Moss.
It may take some time for an insurance adjuster to inspect your home after a storm, so document everything as soon as possible. According to Moss, having your own documentation can help your insurer process your claim faster and resolve potential claim disputes.
Renters and condo owners typically need special coverage
Renters insurance policies are just as important as homeowners insurance policies, but for very different reasons. If you live in an apartment, your landlord insures the building, but you must carry renters insurance to protect your belongings.
Find out what areas of your condo are covered by the association and what you will need to insure if you own one. In addition to your personal belongings, you may be required to contribute to the cost of repairing the damaged structure. Before you buy, consult with your association attorney or property management company to determine the exact type of coverage you will require.
Fortunately, for renters insurance policies, there is usually no hurricane deductible – only the standard deductible.
Frequently asked questions
What is hurricane insurance?
There is no such thing as "hurricane insurance" or "hurricane coverage," but there is insurance to cover hurricane damage. The two most serious threats are wind damage and flooding.
Some coastal home insurers exclude windstorm damage, so windstorm insurance must be purchased separately. Flooding is another major concern. Flood damage is typically not covered by home insurance, so a separate flood insurance policy will be required.
What is a hurricane moratorium?
An insurance moratorium is a period of time during which insurance companies refuse to write new policies or allow coverage updates to existing policies. In the case of hurricanes, a moratorium is usually imposed once the NOAA issues a hurricane watch or warning.
What happens if your car is damaged in a hurricane?
Hurricane damage to your car (including flood and wind damage) is generally covered as long as you have comprehensive insurance on your auto policy.
How much is hurricane insurance?
The cost of flood insurance is determined by your policy limits and the level of financial protection you require, as well as whether you purchase from a government or private company. Flood insurance from the National Flood Insurance Program typically costs around $700 per year. Your own rates will be determined by where you live, whether you live in a flood zone, the amount of coverage you require, and the deductibles you select.
If you plan to buy a home soon, compare prices and coverage with multiple insurance companies. Finally, it may be beneficial to do more than a cursory review of your policy. Take the time to understand what it includes (and excludes), how to file a claim, and any additional coverage you may require.