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A Guide to Insurance Coverage for Hurricanes

November 15, 2018

With hurricane season in full swing, it’s important to review your homeowners or renters insurance policy to ensure you have the correct coverages in place in case a storm strikes. There are three areas of coverage you’ll want to make sure are correct for your unique situation. Those are proper coverage for your home’s structure, proper coverage for your possessions, and coverage for additional living expenses.

Coverage for Your Home’s Structure

While most homeowners insurance will cover your home’s structure in a disaster such as a hurricane or a windstorm, it’s important to understand your insurance payout after a disaster. The first thing you’ll want to check is if your policy limit is enough to rebuild your house. There are many factors that go into the cost of a rebuild or extensive repair; however, remember the real estate value of your house is not the same as the cost to rebuild it.

The next thing you’ll want to understand is your hurricane deductible. Most homeowners policies, for every coastal state, includes a separate deductible for hurricanes and windstorms. These will usually be stated in the Declarations section on the front page of your policy. A hurricane deductible is applied to hurricanes, while your windstorm deductible is applied to any wind damage outside of hurricane damage.

While most homeowners policies have a standard dollar amount for normal damage, both hurricane and windstorm deductibles are calculated as a percentage of the insured value of your home. This is often in the 1 to 5 percent range. Generally, higher risk areas carry a higher percentage than lower risk areas.

An important thing you should also consider are the exclusions for your homeowners policy. The most common exclusion is flooding. Flooding is covered under a separate policy and is not part of your standard homeowners policy. It’s important to not underestimate your risk to flooding, because according to FEMA 90 percent of all natural disasters include some form of flooding.

Coverage for Your Possessions

All homeowners policies help cover the cost to replace your possessions due to a hurricane. However, the cost to replace all your furniture, clothing, and personal belongings is often vastly underestimated. The best way to help determine the value of your possessions is to create a full inventory. A great way to do this is to create a spreadsheet and go room by room writing down all your possessions. Once you have the list you can go online looking up each to generate a good estimate of their values. Try to update this list a few times a year if possible!

Having a list like this will help speed up your insurance claims process and will help with proof of losses for tax and insurance payout purposes. Most homeowners policies will cover about 50 to 70 percent of the amount of insurance you have on the structure of your home for your possessions. So make sure this enough to cover everything you may need to replace.

Coverage for Additional Living Expenses

If your home is severely damaged you’ll need to live somewhere temporarily while your home is being repaired. The additional living expenses (ALE) you incur such as a hotel, restaurant meals, etc. are covered under your policy. Generally, this amounts to about 20 percent of the coverage on the structure of your home.

You’ll want to make sure this is enough to cover your needs. Most insurance providers offer higher coverage limits for ALE, so you’ll want to assess your potential needs. Additionally, most ALE reimbursements are limited to a specific amount of time; therefore, it’s important to make sure you’re confident in your policy’s limit.

When a hurricane or wind event strikes your home, it’s important to be prepared. So make sure you review your policy to ensure the right coverages are in place before you’re faced with a destructive hurricane.