What is hurricane insurance?

Hurricane insurance does not exist as a separate type of policy. The term generally refers to a hurricane deductible on a homeowner’s insurance policy, which is the amount a homeowner pays before the insurer covers damage caused by hurricanes. This deductible, based on a percentage of property value, is common in 19 hurricane-prone states and the District of Columbia.

It can also mean particular types of catastrophe insurance that cover flooding or extreme winds, which is often necessary in high-risk states like Florida and Texas.

Understanding Hurricane Insurance

Hurricane Deductibles are separate from regular homeowners insurance deductibles and are based on a percentage of the home’s value. While the deductible on a regular home insurance policy is a fixed amount, say $500 or $2,000, a hurricane deductible can be 2 to 5 percent of a home’s insured value, or $2,000 to $5,000. $ for every $100,000 of coverage.

Hurricane deductibles first developed in 1992 after Hurricane Andrew inflicted significant losses on homeowners insurance companies in Florida, but they became more prevalent in 2005, following Hurricane Katrina. Insurance companies are turning to reinsurers when they find it difficult to pay large amounts of claims at once, but even reinsurance companies have struggled to cope with such huge losses. As a result, insurance companies have begun requiring hurricane deductibles in 19 states and Washington, D.C. homes located in these states, all of which are on the Gulf of Mexico or Atlantic Coast, are likely from being damaged by hurricanes.

A homeowner is generally required to pay a hurricane deductible if there is a named hurricane in the area. Sometimes a severe tropical storm triggers the franchise. The hurricane deductible is in effect for any damage occurring until the storm is downgraded. Rules vary by state.

Even when a hurricane deductible does not apply, a windstorm deductible may apply. A windstorm deductible applies to damage caused by any type of strong wind. It can be slightly lower than the hurricane deductible, sometimes as low as 1% of the insured value of the property.

States where hurricane deductibles apply

States/regions where hurricane deductibles apply are:

• Alabama
• Connecticut
• Delaware
• Florida
• Georgia
• Hawaii
• Louisiana
• Maine
• Maryland
• Massachusetts
• Mississippi
• New Jersey
• new York
• North Carolina
• Pennsylvania
• Rhode Island
• South Carolina
• Texas
• Virginia
• Washington, D.C.

Policies Offering Hurricane Coverage

Homeowners should also be aware that even if they pay a hurricane deductible, gaps in their coverage may exist. Most home insurance policies do not cover flooding caused by an external natural event, such as a hurricane. Owners need a flood insurance an insurance policy covering this destruction or water-related damage.

Additionally, homeowners insurance policies in some hurricane-prone states do not cover wind-related damage. So if you want to protect your property, you need to purchase separately wind storm insurance. In this case, any damage or destruction caused by wind would fall under this policy instead of the traditional homeowners policy. At the top of hurricane coverageWindstorm insurance applies to problems resulting from tornadoes, cyclones, and other types of high-speed winds.

How Hurricane Deductibles Are Calculated

To some extent, depending on the state, insurance companies dictate the level of the hurricane deductible and where it should apply. However, insurers’ hurricane excess plans are subject to state regulations. Rhode Island, for example, sets a 5% cap on hurricane and windstorm deductibles.

In hurricane-prone Florida, the state requires that homeowners have the option to opt for a flat $500 hurricane deductible. The premiums can of course be higher than if you choose one of the other mandatory options: 2%, 5% or 10% of the insured value of the residence.

In some states, homeowners can pay lower insurance premiums if they make improvements to their home to minimize hurricane damage, such as installing storm shutters or glass windows and doors. hurricane resistant laminated.

The essentials

Hurricane insurance can be a valuable tool to protect you from financial hardship if your home suffers damage from a hurricane. Whether hurricane insurance is right for you depends on several factors, including the risk of a hurricane damaging your home and your financial situation. Consider consulting a financial advisor for advice regarding your specific needs.