Some Details of Home Owners Insurance
By James Shelly
Hurricanes are considered a covered cause of loss in most homeowners policies. However, there are some important distinctions to be made.
First, damage to a home caused by hurricane winds may be covered but not loss caused by flooding.
Second, in areas vulnerable to hurricanes, insurance companies may include a separate deductible for hurricane damage.
Third, all insurance companies define a hurricane in their own way. Know your policy.
Hurricane Wind Coverage
Hurricanes are characterized by strong winds. If wind damage is caused by an opening in your home (for example, loss of roof, or broken windows), the insurance company will pay for the damage, subject to any deductible. Additional losses caused by wind and water entering the home through openings caused by wind will also be covered.
Hurricanes are also generally accompanied by flooding events caused by excessive rainfall, overflow of rivers and lakes, backup of sewer and storm drains and inundation from wind driven water, tidal waters and storm surge. These may be caused by or exacerbated by wind. They may be caused in part by human or animal actions or negligence. In any case a homeowners policy will not cover losses from these perils.
The only way to be covered against losses from flood is to purchase a separate flood policy. After hurricane Katrina in 2005, policyholders who were denied coverage for flood losses in multiple states brought suit against their insurers to make them pay. They were unsuccessful. The courts generally agreed that flooding was excluded in plain, unambiguous language in their policies.
If you have a homeowners policy, make sure you understand your coverage. If there is a separate hurricane deductible, be sure you understand how it operates and what kind of weather event triggers its application. The policy may refer to windspeeds and the declarations of the national weather service, but each insurer makes important distinctions that affect coverage.
The separate hurricane deductible in a homeowners policy is often a percentage of the home’s Replacement Cost figure, also referred to as Coverage A. If the Replacement Cost figure on a home is $300,000 and the hurricane deductible is 3%, then the hurricane deductible is $9,000.
For this reason it is important to carry just enough Replacement Cost coverage to rebuild the home in the event the worst happens. Carrying more insurance than needed increases the hurricane deductible while the additional Replacement Cost dollars are not actually accessible to the policyholder. In the event the home is completely destroyed in a covered event, the claims adjuster is only going to make enough dollars available to the policyholder to rebuild the house they have lost, regardless of how much more insurance the policyholder was paying for.
The preceding information is intended only as a general guide and is taken from various sources. For information or recommendations specific to your individual situation, seek the advice of a qualified professional.
James Shelly is an agent with Farmers Insurance of Armonk