Homeowners Insurance & Hurricane Damage

Of all the insurance products, homeowners insurance may be the most diversified.

From vandalism to certain types of water damage to even dog bites, homeowners insurance can offset the expense of many unfortunate events.

In this article, we will discuss what to do if your home is damaged by a hurricane and how homeowners insurance can help.

Does Homeowners Insurance Cover Hurricane Damage?

Generally speaking, yes, but if you live in certain states, there’s something that you need to be aware of, given the frequency with which hurricanes transpire. Hurricane season is a yearly event. Stretching from June 1 through November 30, it’s during this period of the year that atmospheric conditions in the Atlantic Ocean intensify, often resulting in tropical storms.

When Does a Storm Become a Hurricane?

When the whipping winds of moisture-rich tropical storm systems reach 74 miles per hour or more, they’re officially deemed hurricanes, as defined by the National Hurricane Center.

Over the past 30 years or so, the Atlantic has produced roughly 12 named storms per year, according to researchers from Colorado State University. Sometimes it’s more, sometimes it’s less. In fact, not a single major hurricane (at least Category 3 on the Saffir-Simpson Wind Energy Scale, wherein sustained winds reach a minimum of 111 mph)  made landfall over the 12-year period following Hurricane Katrina in 2005.

The extended quiet period has since ended, as several Category 4 hurricanes made direct hits and led to massive amounts of destruction. 2017 resulted in Hurricanes Harvey, Irma, and Maria, the first year on record that three Category 4 storms struck the U.S. in a single season, according to the Insurance Information Institute. Irma arrived in September, typically the most active hurricane month, and impacted parts of Alabama, Florida, Georgia, North Carolina, South Carolina, as well as Puerto Rico, is the third costliest hurricane on record, topping $20 billion in damage.

How Do Hurricane Insurance Deductibles Work?

If you’re a homeowner, you likely have some familiarity with deductibles. These are the portion of an insurance claim that you’re responsible for before your insurer picks up the rest. For example, if your deductible is $3,000 and the cost to fix your wind-damaged roof is $20,000, your insurer covers $17,000 of that total.

Hurricane deductibles work a bit differently. With these, the portion of a homeowners insurance claim caused by hurricanes you spend is influenced by your property’s insured value. In other words, instead of a fixed out-of-pocket amount (as referenced in the example above), your insurer establishes a certain percentage that you pay for before it takes care of the rest. Thus, if a house is insured for $300,000 and the hurricane deductible is 5%, the out-of-pocket amount the policyholder is responsible for is $15,000. The carrier covers the remainder, or whatever the monetary limit of the policy happens to be.

Which States Have Hurricane Deductibles?

Of course, not all states have hurricane deductible legislation in place.

The 19 that do are:

As you can see, most of the states whose insurance residents pay hurricane deductibles are coastal, meaning they’re more at risk for being affected by tropical storm damage. Not surprisingly, Florida, Louisiana and the Carolinas are home to eight of the 11 counties most frequently hit by hurricanes between 1960 and 2008, according to statistics collected by the III.

Hurricane deductibles are a fairly recent phenomenon. As noted by the III, they were largely inspired by an uptick in tropical storm activity in the early 1990s, most notably Hurricane Andrew, which remains one of the most powerful storms to affect Florida to this day. It was also one of the costliest, only topped by Hurricane Katrina in 2005 (estimated cost: $51 billion). Indeed, between 1994 and 2013, insured losses topped $159 billion, according to the National Association of Insurance Commissioners. Much of this was a product of increased development and population growth in the affected regions.

In an effort to remain profitable, and prevent premiums from spiking for homeowners and business owners, insurers decided to introduce hurricane deductibles.

When Do Hurricane Deductibles Kick In?

Given that destruction caused by hurricanes can be similar to what results from unrelated storm activity (such as tornadoes, thunder and lightning, or heavy winds) you may be wondering when hurricane deductibles are actually triggered. It all depends on where you live. As a general rule, when the National Weather Service issues a hurricane watch or warning for a given state, the hurricane deductible rule goes live. Should your house incur storm damage during this period, such as broken windows or shorn-off siding, what you spend out of pocket is a percentage of your home’s insured value.

That said, each state has regulations in place that may be different from the next. For example, in Connecticut, hurricane deductible rules remain in place so long as the NWS declares that a Category 1 or stronger hurricane could affect the state. 24 hours after NWS gives the all clear and lifts any warnings, the deductible rule ends.

In Florida, where tropical storms are not only more common but historically more powerful, the hurricane deductible rule doesn’t sunset for a full 72 hours following NWS’ suspension of the watch or warning.

What Kinds of Damage Do Hurricanes Produce?

The extent and type of destruction resulting from hurricanes can run the gamut, usually in conjunction with its power. Category 4 hurricanes (which produce wind speeds of between 130 and 156 mph) can topple power lines, snap tree limbs, and rip shingles and siding straight off of homes and businesses.

Perhaps the most destructive force is flooding. According to the Federal Emergency Management Agency, flooding is routinely the No. 1 natural disaster in the U.S., meaning it’s the weather-related catastrophe that occurs the most often and generally results in the largest amounts of cost-related damage. Every state over the past 10 years has experienced flooding, be it overland or flash. While homeowners insurance does cover certain types of water damage, overland flooding isn’t one of them.

You May Need Flood Insurance

It’s not uncommon for homeowners to assume that a basic homeowners insurance policy pays for flood-related damages, only to find out otherwise upon filing a claim. That’s why it’s important to supplement your homeowners insurance policy with flood insurance, which can be obtained through the National Flood Insurance Program. Although the federal government runs the NFIP,  coverage is available for purchase through most private insurers.

If you live in a flood zone, you may be required to obtain flood insurance by your state or mortgage provider. Even if you don’t live in an area that’s prone to flooding, you’d be wise to get yourself covered because 20% of flood claims are filed by policyholders who live in areas that aren’t considered high risk, according to FEMA.

3 Tips That Can Raise Your Hurricane Insurance IQ

If you live in a hurricane-prone state and would like to find the best home insurance to fit your needs, visit our list of homeowners insurance.