What Is Hurricane Insurance and Do You Need It?
Hurricane insurance is a collection of insurance policies that you can buy to protect your home from hurricane damage, such as flood, windstorm, and home insurance.
If you live in a hurricane-prone area, you should get enough coverage to cover the cost of completely rebuilding your home. Hurricanes can cause catastrophic damage, and standard home insurance policies do not always cover all of it.
Hurricane wind damage covered by homeowners insurance
A home insurance policy is the first line of defense against a hurricane, and in some states, it may be supplemented by flood insurance or windstorm insurance. A standard home insurance policy will cover damage caused by high winds. If the high winds of a hurricane, for example, rip off your siding or shingles, your policy will reimburse you for the damage. Some policies include a hurricane deductible.
Coverage for wind damage: Windstorm insurance
Companies in some states, such as Louisiana, Texas, and Florida, may require you to purchase an additional windstorm insurance policy in addition to your standard home insurance policy. In this case, all wind damage would be covered by this policy rather than your standard homeowners policy. In addition to hurricane coverage, you'd be protected against tornadoes, cyclones, and high-speed wind damage. You should check with your insurer to see if you require a separate windstorm policy.
Hurricane deductibles
In 19 states, you may be required to pay a hurricane deductible in addition to your regular deductible before being reimbursed for a hurricane claim. The hurricane deductible is typically between 2% and 5% of the amount insured for your home.
- For example, if your home is insured for $500,000, you may be responsible for the first $10,000 to $25,000 in deductible. However, hurricane deductibles aren't always based on a percentage. In Florida, you must be given the option of a $500 flat-rate hurricane deductible, though your premium may be higher if you choose one of the other required options: 2%, 5%, or 10% of your home's insured value.
Typically, for the deductible to be activated, the storm must be a named hurricane and meet certain other criteria, such as reaching land. Check your policy documents or ask your insurance company when the hurricane deductible is due.
Just be aware that you may have to pay thousands of dollars out of pocket to have your home repaired following a hurricane. If you own a high-value home and are concerned about a hurricane, keep the deductible funds on hand.
Hurricane and water damage covered by flood insurance
Flood insurance only covers one thing: damage to your home and belongings caused by an external flood. This refers to water damage caused by rain or storms, not a burst pipe.
Flood insurance covers water remediation and repairs if a hurricane causes rising floodwaters and the water enters your home. Flood damage is particularly costly; an inch of floodwater can cause $10,000 in damage on average.
The average flood insurance claim amount is $30,000.
If you live in a high-risk area, your mortgage lender may require you to have flood insurance. For everyone else, the simplest way to determine whether your home is at risk of flooding is to search for your address in your community's flood map to find your flood risk. The Federal Emergency Management Agency's flood mapping programme involves thousands of communities across the country (FEMA).
Flood maps are divided into various "risk" categories. If you live in a "X" or "A" designated flood zone, your home is at the greatest risk of flooding, and you should obtain flood insurance. You live in a moderate zone if you are in a "B," "C," or "X" zone. Moderate-risk areas account for approximately 25% of all flood insurance claims. A flood insurance policy is a good idea if a hurricane is expected to hit your area in the next few years and you live in a moderate zone.
If you live in an area where flooding is unlikely, you can probably avoid flood insurance.
Why you need both home and flood insurance for a hurricane
Whether you have a homeowners policy or a home and windstorm policy, the coverage will most likely be insufficient. A hurricane brings both wind and water, but a windstorm policy only covers wind. If the cause of the damage — wind or water — is unknown, dealing with the insurance company can be a major headache. To avoid this situation, you should also have a good flood insurance policy.
For example, during Hurricane Sandy in 2012, a home collided with and destroyed a neighboring home. The owners of the destroyed home claimed wind blew the neighbor's home into theirs, but the insurer claimed it was water. Because water was found to be the cause, the homeowner's claim was denied, and they received no money for repairs. This is where flood insurance could have come in handy to help pay for the cost of rebuilding their home.
How much does hurricane insurance cost?
To fully protect their home from a hurricane, most homeowners must pay around $2,179 per year.
The average cost of homeowners insurance is $1,445 per year, while flood insurance costs $734 per year. Extra windstorm coverage may cost several hundred dollars more, but the amount you ultimately pay is determined by the value of your home and its proximity to a body of water.
If you live in a high-risk flood zone, you could end up spending several thousand dollars on flood insurance — something to think about before purchasing a home so close to water. Home insurance policies for very valuable homes will be more expensive, and can cost several thousand dollars. But keep in mind that the more valuable your home, the more you stand to lose during hurricane season.
Does hurricane insurance protect your car?
Your home insurance does not cover damage to your car caused by flooding, wind, or hail, but your car insurance may.
Most states require liability coverage, which covers damage to others in the event of a hurricane, such as if wind or water smashes your car into a neighbor's house. Collision coverage protects you if you hydroplane and collide with another vehicle.
During common hurricane scenarios, comprehensive insurance will pay for car repairs or pay out the value of your car:
- Strong winds flip your car over
- Debris like street signs or tree branches hit your car
- Rising flood water carries your car away
- Saltwater flooding rusts or corrodes your car