Am I underinsured for hurricane damage?

26 Aug

Tropical Storm Henri hit the Northeast pretty hard over the last week and for many homeowners the pain caused by the storm could just be getting started. Unfortunately, many homeowners may be underinsured or not have the right coverage in place when it comes to tropical storm and hurricane damage.

A recent study by Policygenius found that 53 percent of homeowners believe that flood damage is covered by a standard homeowners insurance policy. This is not true and if your home is damaged by storm surge or flood waters, the cost to repair the damage will fall to you unless you are carrying a separate flood insurance policy. 

When it comes to hurricanes and tropical storms, homeowners insurance may cover certain damage while denying coverage for other types of damage. Let’s have a quick look at what it does and doesn’t cover when it comes to storm damage.

What is covered?

Homeowners insurance will cover the vast majority of hurricane and tropical storm damage. A standard homeowner policy will protect your home against the following hurricane damage:

  • Wind: Hurricanes and tropical storms often come with raging winds that can do serious damage to your home, tearing off roofs, knocking down sheds and barns or even blowing your entire home down. Wind damage is covered by a standard homeowners policy.
  • Rain: While damage done by rain would be covered if your roof is blown off and the rain gets into your house and damages your home and possessions, if the rain causes flooding and your home is damaged by floodwaters the damage would not be covered by a homeowners policy. 
  • Hail: Damage done by hail can be extensive and in most cases, it would be covered by a standard homeowners policy. Hail can damage your roof, siding and even break windows if it is large enough.
  • Lightning: Severe storms often come with severe lightning which can lead to fires and power surges. Damage done by lightning is typically covered by a standard homeowners insurance policy. 
  • Falling trees: Wind or lightning can knock a tree down that ends up falling on your home. This damage would be covered by your homeowners policy up to your coverage limits. 

What isn’t covered?

Flooding and “earth movement” damage is excluded from the majority of homeowners policies. Let’s have a look at each:

Flood: Flood damage is excluded from pretty much every standard homeowner policy. This includes storm surge, extensive rainfall that leads to flooding, tsunamis and even dam failures. If your home is damaged by any of these perils and you are not carrying flood insurance, you will be on the hook for the cost to repair or rebuild your home. 

Flood insurance is sold by both the National Flood Insurance Program (NFIP) and by private insurers. NFIP policies come with coverage caps so depending on the amount of coverage you need, you may need to purchase coverage in the private market. Flood insurance can be expensive, but it can be a financial lifesaver if your home is damaged or destroyed by a flood.

Call Now for a Quick Flood Insurance Quote: 888-620-1954

Earth movement: In most cases, an earthquake or other earth movement is not part of a hurricane or other major storm system but if it is, the damage would not be covered. This includes earthquakes, sinkholes and other types of earth movement. 

Hurricane deductibles may apply

Homeowners insurance comes with a deductible which is the amount that you must pay before your policy steps up to cover the balance up to your coverage limits. However, in some areas, ones that are prone to severe storms, there may be a hurricane or wind deductible. 

If your policy has a wind or hurricane deductible, it is most likely a percentage deductible which means that the deductible is a percentage of your home’s total dwelling coverage. As an example, if you are carrying $300,000 in coverage and have a 3% deductible, you will have to cover the first $9,000 of damage before your insurance kicks in to cover the rest. Percentage deductibles typically range from 1% to 10% of your dwelling coverage.

The following states allow a percentage deductible for wind or hurricane damage:

In most states, a hurricane deductible will go into place once a storm has been named by the National Weather Service or the National Hurricane Center.

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