2020 brought some 30 named hurricanes to the Atlantic coastline. 11 of those hurricanes came ashore bringing wind, water, and, of course, destruction.
For those in the path of a hurricane, it’s not just about surviving the impact of the storm, but also the clean-up and repairs that follow it.
That means homeowners need to look at their insurance policy and consider the added impact of the hurricane deductible. Are you wondering how hurricane insurance and the deductible that goes with it are different? Do you need special insurance? How do insurance companies cover the damage that comes from a hurricane?
Read on to learn all you need to know about disaster insurance and hurricane deductibles.
How Past Hurricanes Impact Insurance Hurricane Policy
In 1992 Hurricane Andres walloped Florida. Then in 2005, Hurricane Katrina decimated New Orleans and the Louisiana coast. In between that time, there were a number of other significant storms too. Between Andrew and Katrina, there was approximately $66 billion in damages and claims.
The impact of these two storms was felt by the insurance companies and their reinsurers. They needed to find a way to lower the claims cost that resulted from hurricane damage.
Because of this, insurers created a new system for calculating hurricane deductibles before insurance can kick in. It’s no longer a set amount, instead, it’s based on the value of the insurance covering the home.
When Hurricane Deductibles Are Required By Insurers
For most insurance companies, the hurricane deductible goes into effect when there is a storm categorized as a hurricane by the National Weather Service or the US National Hurricane Center.
The insurance companies use a term called a trigger. More on this term later. Basically, the insurers pre-establish their trigger line that would enact the hurricane deductible. If you live in a hurricane zone, you want to read your policy carefully to know your insurer’s trigger.
How Insurance Deductibles Work
When you buy a house, you also seek homeowners insurance from your insurance company. In fact, if you have a mortgage, it’s required to have homeowner’s coverage.
This coverage protects your home from the kinds of damages it might face like fire, storms, vandalism, etc. If your home is damaged in some way, you make a claim to the insurance company.
The insurance adjuster assesses the damage and the insurance company pays for the damage after you pay your deductible. Your deductible is reestablished in your policy. In fact, you can adjust your deductible amount to help adjust your insurance rates.
Hurricane deductibles are not reestablished in a policy, so they don’t work the same way they might for other claims.
What Is a Trigger Event?
Whether you actually pay the hurricane deductible is based on if there is something called a trigger event. Each insurance company defines a trigger event slightly differently, so it’s important to know how your insurer defines it.
In many cases, the trigger event is if the National Weather Service categorizes a storm as a named hurricane.
So, your home could experience wind damage from a tropical depression or a bad storm coming off the water. Your regular deductible would apply. If the storm was classified as a trigger event, then the rules for hurricane deductibles would kick in.
How Are Hurricane Insurance Deductibles Different Than Homeowners Deductibles?
Now that you understand when a hurricane deductible is in effect, let’s take a closer look at how an insurance company calculates a deductible.
First, the deductible is not a set reestablished amount like your regular homeowner’s deductible, you’ll recall. Instead, the insurance company will look at the insured value of your home. Then the deductible becomes a percentage of the value of the home’s insured value.
It’s important to know that the percentage varies from insurance company to insurance company. You want to know what percentage your insurance company uses.
Let’s look at an example for clarity. If your home’s insured value is 400,000 and your hurricane deductible is 5%, your deductible would be $20,000. You would be expected to pay this deductible before insurance would kick in for coverage.
States With Hurricane Deductibles
Not all states have hurricane deductibles because not all states are likely to get them. These states have some form of the hurricane deductible in place:
- New Jersey
- New York
- North Carolina
- Rhode Island
- South Carolina
The District of Columbia also uses hurricane deductibles too.
More Than One Hurricane In a Year
If you’ve lived in a hurricane region for any length of time, you all know that there’s a good chance of experiencing more than one hurricane in a season. In fact, the way climate change has made this highly likely.
So, does that mean you pay the larger hurricane deductible for each storm? The good news is that no, it’s not calculated that way. You only have to pay that larger hurricane deductible once each calendar year.
So, there are few ways this can play out. If you have a mild hurricane and don’t pay all of the hurricane deductibles the first time, on the next storm, you’d pay the remainder.
If you’ve already paid the entire hurricane deductible already in a year, then you would revert back to your regular all perils homeowner’s deductible.
One major impact of hurricanes is flooding. The damage that comes from flooding is different and actually requires different coverage. Flood damage isn’t covered under the hurricane deductible or your regular homeowner’s policy. You need to have flood insurance coverage too.
No matter the cause of the flooding, storm surges, overflowing rivers and lakes, and floods from torrential rain, all must be covered under a flood policy. This is true in all parts of the country, not just hurricane regions.
Getting the Help You Need in Dealing With Your Insurance Company
Now that you understand hurricane coverage and flood insurance coverage, you can probably see how it can get complicated to get an insurance company to pay claims.
It’s not surprising that many people find it necessary to hire an attorney to help them get the coverage they need from a hurricane disaster.
Understanding Your Insurance and the Hurricane Deductible
If you live in a state or region impacted by hurricanes, it’s critical to understand hurricane deductibles. If your home has the potential to be impacted by a hurricane, you need to know how you’re covered and that you have the right coverage in place.
If you’re struggling with your insurance company to get coverage from storm damage, we can help. Contact us today so we can evaluate your case and get to work getting you the claims money you need.