Hold onto your hat. Atlantic hurricane season is officially underway. From June through November, communities all along the Gulf and East Coasts of the U.S. are on alert for these severe storms. After a relatively mild 2009, experts at the National Oceanic and Atmospheric Administration are predicting an active season for 2010, due to warmer than average sea surface temperatures. If you haven’t done so already, now is a very good time to review your homeowner’s insurance to see if you’re adequately covered for hurricane wind and water damage. Pay close attention to the Exclusions and Limitations clauses.
The first surprise you’ll probably encounter is that your standard homeowner’s policy doesn’t say anything about “hurricane” damage. It will, however, most likely speak to the two types of damage you’ll face if a hurricane hits your area: wind and water. Most standard homeowner’s insurance coverage will take care of water damage that results directly from rain entering via an area that was damaged by the wind — for example, if the storm blows your roof off. That means water damage caused by a storm surge probably won’t be covered by your standard homeowner insurance. For that, you’ll need a separate flood insurance policy, which won’t kick in for 30 days, so consider yourself warned.
In addition to wind damage, the basic homeowner’s insurance policy also will typically cover you for losses resulting from rain, hail, wind-driven rain and lighting. Make sure yours does, too.
It is possible to get a policy that specifically covers hurricane risk, but be prepared for a hefty deductible. The ever-increasing amount of development along the Gulf Coast and Eastern Seaboard has also increased the potential risk insurance carriers face in the event of an event.
Florida, which has a high hurricane exposure, allows homeowners to waive coverage for their home content and only cover the structure. This helps to keep hurricane insurance premiums within reason.
If you’re price sensitive, you might also want to consider a higher deductible, if your mortgage holder will allow it. Before taking this step, be sure you are confident that you’d have the financial wherewithal to come up with the tens of thousands of dollars in cash in the event of catastrophic hurricane damage to your home. There are two types of wind-damage deductibles: hurricane, which covers only the damage resulting from the actual hurricane event; and wind/hail deductible, which will cover damages resulting from any kind of wind.