What Is Hurricane Insurance?
Every homeowner living in a region where hurricanes are just part of life needs to have hurricane insurance. Hurricane insurance covers the damage and losses occurring to your home during a hurricane. Homeowners insurance doesn’t cover this. Depending on where you live and the carrier, hurricane insurance cost averages range from $300 to $2,500 depending on the risk.
Insurance is expensive and we get it. We don’t like having to pay that extra bill. In fact, there are some hurricane zones that rarely see hurricanes pass through and even more rare is significant damage. Seems like a good bet. Right? But when that supercell is twisting its way to you and you want the insurance you won’t be able to get it. So, plan ahead.
What Hurricane Insurance Is
A hurricane insurance policy is a specialty policy that covers your home from damages incurred during a hurricane. Hurricane insurance doesn’t cover any old windstorm or wind damage. It protects your home during an actual hurricane which means if the storm drops to a tropical storm, your homeowners or other policies would need to kick in to cover damages.
Some hurricane insurance policy carriers combine two independent specialty policies, windstorm and flood to make one policy. There are other policies where a hurricane policy might not cover both wind and flood damage. Flood damage refers to a rise in water and may require an independent policy.
What Risks Are There During A Hurricane
Your home is at increased risk during a hurricane due to the high winds, rainwater and often storm surge. Electricity often goes out and there are surges of power that can lead to fires.
Here are the risks to your home during a hurricane:
- Roof Damage: Winds can blow shingles off, trees and other airborne objects could crash into it or a small unsealed window allowing air into the home can create a vortex to pull the roof off.
- Water Damage: Water damage can come from rain and roof damage or from flash flooding and storm surge. Storm surge rose more than 12 feet in some areas during Superstorm Sandy.
- Property Damage: The extreme elements during a hurricane can lead to destruction of property and even the structure. Trees flying through windows or landing on homes is a common occurrence during hurricanes.
What Hurricane Insurance Covers
There are four coverage parts to a hurricane policy. You can adjust coverage to each of these as well as deductibles to help adjust the cost of premiums. Hurricane insurance only covers actual hurricane damage not tropical storm damage. Hurricanes are defined by sustained wind speeds.
There are five hurricane categories defined by sustained wind speeds:
- Category 1: 74-95 mph sustained winds
- Category 2: 96-153 mph sustained winds
- Category 3: 111-129 mph sustained winds
- Category 4: 130-156 mph sustained winds
- Category 4: 157+ mph sustained winds
Your hurricane insurance policy has many of the same coverage options that your homeowner’s policy does. It is considered a companion policy using the same values for home replacement costs and baseline personal property.
Coverage A: Dwelling and Building
Coverage A is critical because it covers the repairs or rebuilding of your actual home. It is based on the replacement value of your home, not the fair market value. This means the insurance company considers what it would take to repair or rebuild your home based on current construction costs in the area.
Coverage B: Other Structures
Coverage B is an option many homeowners may consider limiting coverage to save on hurricane insurance costs. It is for other structures on the property such as a shed, pergola or detached garage. If they are included, the same principles apply as do for Coverage A in calculated replacement cost.
Coverage C: Personal Property
Coverage C is the option to cover contents you own in the home. This includes everything from clothing and kitchenware to furniture and appliances. Less your deductible, hurricane insurance pays for the replacement of your contents up to the policy Coverage C limits. Increasing contents coverage will increase premiums.
Coverage D: Loss of Use
Coverage D gives you payments to go somewhere to stay while your home is being repaired or rebuilt. This is one of the most important coverage options you can choose to make sure you are aren’t paying a mortgage and paying to rent a place after a hurricane.
What Hurricane Insurance Doesn’t Cover
Unless specifically defined, a hurricane policy will not cover you for a flood that happens by rising water. This is something very confusing to homeowners. Hurricane insurance policies cover hurricane wind; this is coverage in excess of windstorm not classified as a hurricane which is covered by many homeowners policies.
Flood Insurance is a specialty insurance usually offered via FEMA. Flood insurance covers a rise in water in an area, so flash flooding or storm surge. It can’t be an isolated home, meaning it covers a geographic area. Without flood insurance, your home is not protected for these losses. If the roof blows off and the rain floods your home, this is covered by the hurricane policy since it isn’t a rise in water.
Other Insurance Needs
A homeowners insurance policy will cover you for losses that happen if the storm drops below hurricane status. Even a tropical cyclone can create significant damage. Review your homeowner’s policy to be certain it covers high winds up to hurricane conditions and that you have the correct coverage amounts for property and contents.
If your hurricane insurance policy does not have flood insurance included, consider purchasing a policy from FEMA. This will protect you in the event that your home is flooded or even gets swept away in flash floods.
Consider the aftermath of Hurricane Katrina. Entire communities are still recovering from this storm that hit in 2005. The event was described as one of the costliest natural disasters in U.S. history. Homeowners were not just forced to evacuate, but to abandon their destroyed homes when they returned. Storm surge rose an astonishing 26-feet reaching the rooftops of two-story homes.
Who Needs Hurricane Insurance?
If you live in a zone where hurricanes hit, you should consider a hurricane insurance policy. You are at greater risk closer to the coast but even those tens of miles inland can be significantly affected by the storm. Costs for policies will be partially defined by the distance you are to the shore or coast.
The entire East Coast is susceptible to hurricanes with the most number of serious storms hitting Florida most frequently. Through the southern coastline and Gulf of Mexico, hurricanes hit Texas second to Florida and move across to Louisiana and the Carolinas. Hurricanes tend to weaken as they move north up the eastern seaboard but this isn’t a reason to take them any less seriously.
Even Maine has recorded six hurricanes making landfall over the years.
While Hawaii doesn’t frequently get a direct hit from a hurricane, where it sits directly in the middle of the Pacific Ocean makes it prone to annual warnings, threats and storm activity.
Who Needs Flood Insurance?
Anyone along the coast in a hurricane zone should have flood insurance. FEMA rates flood zones according to risk and establishes premiums based on that. Flood policies can be as little as $300 annually for a low-risk area to tens of thousands in high-risk, high-cost real estate areas. Just because you aren’t in a hurricane zone doesn’t mean you aren’t in a flood zone.
Go to the FEMA website and use their Flood Map Service Center to search your address to properly assess your risk. Discuss your concerns with your insurance agent to get the best advice.
Doesn’t Homeowners Insurance Cover Hurricane?
Homeowners insurance will not cover damage by serious winds, rain or flooding causes during or immediately after a hurricane. Most hurricane policies will cover resulting damage occurring 72-hours after the storm has passed as storm surge and flooding continue.
Will My Windstorm Policy Cover Hurricane Damage?
Windstorm policies that don’t define hurricanes or hurricane force winds will not cover hurricane damage. Sustained winds have to read 74 miles per hour for the storm to officially be declared a hurricane. If your windstorm policy covers wind damage in excess of 74 miles per hour for sustained periods of time and doesn’t’ specifically exclude hurricane in the language, it should cover the storm damage.
Do check with your insurance agent or carrier to confirm what your policy does and doesn’t’ cover.
Condos and Hurricane Insurance
Condominiums have shared ownership for common spaces, structures and roofs. These are usually covered in a master policy for the whole association but not every association takes out hurricane insurance. Every homeowner in the association should have their own policy that covers “Loss Assessment.”
This coverage is unique to HOAs and pays the homeowners portion of any deductible or assessed cost by the association and its master policy. Ask to see the policies your HOA has and set your Loss Assessment to the appropriate value. Advocate for an association master policy with hurricane coverage.
Final Thoughts on Hurricane Insurance
Hurricane insurance is an absolute necessity in areas where hurricanes are a real and regular threat. Most mortgage companies will require a policy to underwrite the loan on top of the standard homeowner’s policy.
If you have questions about hurricane insurance and how it affects your home and potential risks, drop a note or connect with us. We’ll be happy to dig into the details with you.