Hurricane Insurance Policy
Hurricanes wreak wind and water damage to homes and businesses when they make landfall. For instance, Hurricane Katrina caused $81 billion in property damage in 2005, according to the National Oceanographic and Atmospheric Administration. Only $40.6 billion of those damages were insured losses though, meaning the home or business owners had to pay for repairs or to rebuild out of their own pocket.
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Who Needs Hurricane Insurance?
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Check your homeowner's policy to see what, if any, hurricane damage it covers. Most homeowner's policies do not include wind or water damage from hurricanes. You may need hurricane and flood insurance. Residents of U.S. Atlantic and Gulf coastal states would benefit the most since those states face an annual threat of hurricane damage.
Hurricane and Homeowner's Insurance
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Generally, homeowner's insurance does not cover catastrophic events, such as those caused by extreme weather events. It covers items such as floods caused by burst pipes. A separate insurance policy is required to cover each catastrophic event type. For instance, there are specific insurance policies for hurricane, earthquake and flood. This separate policy is usually purchased for the same amount of coverage as the homeowner's policy, plus additional living expenses.
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Coverage Basics
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Hurricane insurance covers the wind damage and flood damage directly caused by water entering the home via wind damage. You may choose additions to the policy that also cover related structures, such as detached garages or workshops.
Additional Living Expenses
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Another helpful addition to a policy, additional living expenses pays for your living expenses when your home sustains damage severe enough to make it unlivable. ALE pays for things like a hotel room or apartment while contractors make repairs to the home. If you rent a portion of your home, ALE may also cover your rent losses while the home remains uninhabitable if you choose this addition to the coverage.
Cost of Coverage
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As with other types of catastrophic insurances, your insurance rate depends of risk factors such as location and whether you have retrofitted your home with protective measures. It also depends on the amount of coverage and insurance company you choose. For example, in Florida, the annual premium can vary from a few hundred dollars to more than $5,000 for a $150,000 policy with a standard 2 percent deductible and no wind mitigation measures installed for a home constructed before 2001.
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References
- NOAA: Tropical Cyclone Report Hurricane Katrina
- Chiff: Hurricane Insurance Tips, Advice, Guides & Information
- FiveCentNickel: The High Cost of Hurricane Insurance
- Insurance Information Institute: Protect Yourself, Your Family and Your Property
- CNN: Hurricane insurance, 5 Tips: What you need to know about insurance after a disaster
Resources
- Photo Credit hurricane katrina image by jcpjr from Fotolia.com
