What's a Hurricane Deductible, and Do You Have One?

By Arthur Murray

When a hurricane damages your home, you may be looking at serious repairs. But don’t assume your homeowners insurance will cover it.

Are you covered under home insurance?

The answer in part depends on the cause of the damage. Standard homeowners insurance doesn’t cover flooding; you’ll need a separate flood insurance policy for that. Check out the National Flood Insurance Program for more information. One caveat: Flood policies don’t take effect for 30 days, so you should act quickly to get your protection in place before the threat ratchets up in late summer/early fall.

But what about wind, the other main source of damage for hurricanes? You’re in better shape there. Standard home insurance policies typically cover wind damage - after you meet your deductible.

Do you know your deductibles?

The deductible is the amount you must pay out of pocket when you file a claim for damage from a covered peril such as fire or hail - or wind. Most people set their policy deductibles at $500 or $1,000, which means that’s the most they’d likely have to pay to repair damage in case of a covered claim.

But it doesn’t always work that way with wind damage from hurricanes. Many policies, particularly for homes in areas along the Atlantic and Gulf coasts, have separate hurricane deductibles. These aren’t expressed in dollars; they’re formulated as percentages, usually one to five percent of a home’s insured value. For example, the owner of a home insured for $300,000 with a two-percent hurricane deductible would have to pay the first $6,000 of a claim for hurricane wind damage.

What’s in wind speed?

Now a bit of good news: Hurricane deductibles generally only are activated if a storm makes landfall with sustained wind speeds of more than 74 mph - the threshold that separates tropical storms from full-blown hurricanes.

When Superstorm Sandy made landfall in the Northeast in late October 2012, its winds were not strong enough to be characterized as a hurricane. Considering that insured losses from the storm totaled nearly $19 billion, homeowners saved millions when it was downgraded.

What homeowners should do

Know your deductible, or deductibles. They’re spelled out on the declarations page of your home insurance policy. If you can’t find them, ask your agent. If you don’t like what you find out, it won’t hurt to shop your coverage with other carriers.

Either way, it’s a good idea - if you live in an area threatened by hurricanes - to start thinking about how you’d pay that deductible now. Otherwise, your financial stability could be blowin’ in the wind.

Related:

• Protecting Your Home Away From Home
• 5 Reasons to Divorce Your Home Insurance Provider
• The Calm After the Storm: One Town’s Hurricane Sandy Story

Arthur Murray writes for HomeInsurance.com, an online insurance resource for homeowners and drivers across the country. 

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

via Zillow Porchlight http://ift.tt/2bKwsnf