If you are a homeowner and live in a hurricane-prone area, you must be aware of hurricane insurance. Hurricane insurance isn’t a separate policy type but it refers to a hurricane deductible available on the homeowners' insurance policy. This is an additional amount you pay over and above the homeowner's insurance to cover the damage caused by a hurricane. It will cover for the damage caused due to water, winds, and hurricanes. If you live in coastal areas, the homeowners' insurance policy might already come with a hurricane deductible which is an extra cost you pay to the insurance company before coverage kicks in.
What is hurricane insurance?
A hurricane insurance deductible is different from homeowners insurance deductibles which are determined by the percentage value of a home. Say, a homeowners insurance policy will have a fixed dollar deductible of $1,500 or $2,000 while a hurricane deductible could be 4% or 5% of the insured value of your home. There are some states where hurricane deductible specifically applies.
Understanding how a hurricane deductible works
Certain insurance companies call wind damage coverage by the name of a hurricane deductible. However, it will only apply to the damage caused by a storm and the deductible is usually higher than your regular deductible. For any insurance company, a hurricane is an expensive event, and the deductible will help reduce their losses. Hence, when we say a hurricane deductible, you will be liable to pay a certain amount of money before the insurance coverage kicks in. In Florida, the deductible can go as high as 10% and this means if your home is worth $200,000, you will have to pay $20,000 out of pocket before the insurance company covers the repairs for damage. The state hurricane deductible amount varies, and you must check it with the insurance company. Usually, it does not exceed 5% and the only exception is Florida where the law lays out what a company should charge. While the deductible might be on the higher side, it will keep you safe in case of a calamity.
Varying coverage requirements
If you are wondering how much coverage you need, there is no right answer to help you. Since insurance companies do not sell a standalone hurricane insurance plan, you will have to depend on the home insurance policy and then consider supplemental coverage to ensure your finances and home are protected in case of a hurricane. An expert hurricane damage lawyer at Chopin Law Firm states, “Based on the personal circumstances and the financial protection you seek, there might be a requirement to consider a higher coverage limit or consider add-ons to the policy. With supplemental coverage, you can ensure additional protection over and above the basic homeowners' insurance policy”. A homeowners' policy will cover the dwelling, personal property, detached units, and additional living expenses in case you are displaced.
Ways you can reduce the cost of hurricane insurance
If you have come to a decision that you will require hurricane insurance to keep yourself protected in the hurricane season, you need to look for ways you can reduce the cost of flood and wind insurance.
You can reduce the cost of flood insurance by increasing the deductible, but you will have to pay more whenever there is a disaster and benefit less from your premiums. That said, always make it a point to compare rates and shop around. Do not proceed with the first insurance company you come across and never let the coverage lapse. A foolproof way of reducing the insurance cost is to flood-proof your home by making improvements.
There are ways to reduce the cost of wind insurance too, but it all depends on where you live. If you reside in Florida, you can enjoy some discounts on the insurance by adding wind mitigation enhancements to the house. This could be a better roof material, an improved roof shape, or even a secondary water barrier.
If you live in a state other than Florida, the best way to reduce the cost of insurance is inspection. This process involves working with an inspector to check the roof, doors, windows, and other features in the home and see if it is built well enough to withstand heavy winds. You will have to pay an amount to the inspector, but it will help earn a discount on the policy.
If you live in a hurricane-prone area, you must understand hurricane insurance deductibles and take the necessary steps to keep your home safe. While it might cost you on the higher side, it is advisable to add a hurricane deductible to your homeowners' policy so that you do not spend all your savings on repairs in case of a disaster. Contact an insurance agent and understand how they determine a deductible and always compare rates before you finalize.
