If you have a home in a region that has a high hurricane risk, you'd better check your homeowner's insurance policy for the details of its deductible for hurricane-related damage. This relatively new addition to insurance policies is not a flat dollar amount but a percentage of your home's value, and it can add significantly to the financial burden you bear if your home is damaged in a hurricane.
When the Hurricane Deductible Applies
A hurricane deductible applies only to damage from storms categorized as hurricanes by the National Weather Service. A so-called windstorm deductible applies to any other wind damage. Each insurance company determines its own "trigger" – the event that invokes the hurricane or windstorm deductible.
How the Deductible Works
A standard homeowner policy provides financial protection against disaster in the form of insurance on the home and its contents. The insurance deductible is the amount of money you must pay toward a loss before your insurance company starts to pay. This is laid out in the policy.
Homeowner policies for properties in areas most likely to be hit by a hurricane may include hurricane and windstorm insurance deductibles as additional requirements beyond the regular deductible.
When the Deductible Applies
Whether or not you'll pay a hurricane or windstorm deductible depends on your insurance company's definition of a trigger event. The deductible will only apply in certain circumstances, which are described in your insurance contract.
Hurricane insurance triggers vary among states as well as among insurers. That's why it's important to review the hurricane insurance details in your homeowner insurance policy. Make sure you have copies of the relevant documents in the emergency bag you keep ready in case you have to leave your home in a hurry. See Eight Financial Safeguards If Disaster Strikes.
Calculating Your Deductible
The amount of the hurricane insurance deductible is calculated as a percentage of a home’s insured value, not as a dollar amount.
For example, a standard homeowners policy with a $500 deductible requires the homeowner to pay the first $500 of insured damage on a claim, regardless of the home’s insured value. However, a hurricane insurance deductible of 5% of a home's worth at a value of $300,000 requires the homeowner to pay the first $15,000 of insured damages.
The typical hurricane deductible is between 1% and 5% of the home's insured value, although policies in some vulnerable coastal areas could have an even higher deductible.
Does homeowners insurance cover hurricane damage?
A standard homeowners insurance policy won’t cover flooding, but you can buy flood insurance separately through the National Flood Insurance Program or on the private market. Many major insurers provide flood insurance through an arrangement with the NFIP, so you can probably buy it from your home insurance agent.
In most states, standard homeowners policies cover damage caused by wind, including hurricanes. But if you live in a high-risk coastal state, you might need to buy separate windstorm insurance, either through your insurance company or a state-run insurance pool. It might also be available as a rider on your current policy. Windstorm insurance covers damage from any strong wind, not just hurricanes.
Does renters insurance cover hurricane damage?
As with homeowners insurance, most renters policies won’t cover flood damage to your stuff — whether from a hurricane or other storm. That may not matter if you live on the eighth floor of a high-rise, but if you’re renting a house or ground-floor apartment near the coast, it may be worth buying flood insurance.
Most renters insurance does pay for wind damage, although this coverage is sometimes excluded in high-risk areas. If wind damage is a concern, double-check your policy to make sure you’re covered. If not, contact your insurance company or agent to see if you can add this coverage to your policy.