The approach of a hurricane is an awful time to discover that your home may not be adequately covered by insurance. Once a tropical storm or hurricane watch or warning has been issued, insurance companies will not allow homeowners to obtain new or additional insurance coverage. Instead of checking your insurance documents during a storm, you should make sure your home insurance needs are met before hurricane season (generally June through November) arrives.
This should include reviewing your policies to understand what is covered, and filling in any gaps you find. It is also wise to become familiar with your various insurance deductibles and other out-of-pocket expenses that may be required if a hurricane damages your home. Starting this process before hurricane season gives you time to start an emergency fund to cover these costs if necessary.
To truly know how to arrange your coverage, you need to know how various insurance policies work in the event of storm damage. Here are answers to three questions on hurricanes and home insurance.
Does homeowners insurance cover damage from a hurricane?
Across most of the U.S., a standard home insurance policy will cover damage caused by windstorms, hurricanes and hail, provided you don’t waive the coverage. If you live near the coast, you may be required to purchase a separate windstorm policy or wind and hail insurance to receive protection for damages from wind.
If flooding occurs as a consequence of the hurricane, the ensuing damages will not be covered by your homeowners insurance. Rising water—in effect, any water that enters the home from the ground—is considered floodwater and will only be covered by a separate flood insurance policy.
You should evaluate your homeowners coverage every-year to make sure your home and personal belongings are insured for the amount it will cost to replace them. Damage to your automobiles from a hurricane would be covered by your car insurance’s comprehensive coverage (provided you have comprehensive coverage).
Do I need flood insurance?
Your home or windstorm insurance will not cover damage resulting from:
• Storm surge
• Pooling of water due to heavy rain
• Water from a swollen creek, river or lake
If the ground is saturated, and the water rises or seeps into your home, it is considered a flood by insurers.
The flood-damage exclusion in standard homeowners policies often comes as an unpleasant surprise to victims of rising waters.
Flood insurance is available from the government-backed National Flood Insurance Program (NFIP). Here are some key things to know about the NFIP:
• A flood policy comes with a 30-day waiting period from the time of purchase before it goes into effect. • Building property (structure) coverage tops-out at $250,000 for residential buildings ($500,000 for commercial).
• Personal possession coverage is capped at $100,000.
• Damage to basement improvements, decks, pools, walkways, trees, or shrubs (landscape) is not covered.
• Additional living expenses you incur due to losing the use of your flooded home— such as hotel and food expenses—are not covered by this flood policy.
Are there special hurricane deductibles I must pay?
Yes, if you live in a hurricane-prone area. To limit their losses, insurance companies in coastal states have homeowners take on more of the risk by attaching higher, percentagebased deductibles for hurricane damage instead of a flat-dollar deductible.
Remember, your deductible is the amount you pay out-of-pocket before your insurance kicks in. Hurricane percentage deductibles typically run from 2% to 5% of your home’s insured value—though they can go higher—so these costs can be significant. In other words, if your home is insured for $350,000 with a 2% hurricane deductible, this would make you responsible for the first $7,000 of repairs. A 5% deductible would push it to $17,500.
You should find your deductible information on the declarations page of your home or windstorm policy.
Insurance Solutions has convenient offices within South Carolina Federal Credit Union financial centers. Call 843-569-4740 (Charleston) or 800-845-0432, ext. 4740 (Nationwide) for a free consultation.
The insurance products available through South Carolina Financial Solutions, LLC, a licensed insurance agency doing business as South Carolina Federal Insurance Solutions, a wholly-owned subsidiary of South Carolina Federal Credit Union are underwritten through and provided by insurance companies authorized, licensed, or enabled to provide coverages in the jurisdictions where such coverage is offered. South Carolina Federal Insurance Solutions acts only in the capacity of an agent or broker in obtaining such coverage. In all instances where a discrepancy might arise between informational, advertising, and/or marketing material and the actual policy issued by the insurance company, the terms and conditions contained within such policies will always take precedence. South Carolina Financial Solutions, LLC and South Carolina Federal Insurance Solutions™ do not offer tax or legal advice. Consult your tax or legal professional for advice.