What the hurricane season means to insurance

With Barry just blowing itself out and as many as 8 hurricanes forecast for 2019, hurricane season is obviously a big deal for all of us on the East Coast. With major systems of winds moving at up to 111 miles per hour, the risks of damage being caused by a hurricane are very real. So, what does this mean for insurance companies?

As you may already know, many HOA insurance policies or office insurance policies do not cover hurricanes. You may need a separate policy altogether, especially if you live in high-risk areas such as near the Florida coasts. Here are a few things to scrutinize even as the season sets in. 

Do your homework

Ideally, one must be prepared for hurricane season well before June. Typically, the season may last till the end of November. Reviewing your policy on time is very important. You need to make sure that your home’s structure is covered sufficiently from disasters such as windstorms and hurricanes.

Check HOA policies

It’s important to understand that the cost of rebuilding a structure or conducting complex repairs in case of severe damage is often the most important thing to evaluate. Factor in the real estate value of the home, potential threats and possible damages and ensure that your home has enough coverage.

Review your hurricane/windstorm deductible

If you live in a coastal state, say from Maine to Texas, you will likely need to include separate deductibles for hurricanes in HOA policies. Most likely, this would have to be clearly stated on the Declarations page of your policy.

A hurricane deductible is reserved for hurricanes alone, whereas a windstorm deductible applies to any type of wind. If your policy includes a hurricane deductible, it would mention the event that would cause the deductible to go into effect. This is usually not like the average ‘dollar deductible’ on an HOA. A windstorm or hurricane deductible may be in the form of a percentage, usually between 1 and 5 percent of the insured value of the structure of your home. If you live in a high-risk area, your hurricane deductible would usually be a higher percentage. Often there’s the option of paying higher premiums for lower deductibles.

Instances of co-opting an apartment or condo

If you share a living space, then you may need a different cover or a condo owner’s insurance policy which is an entirely different policy. Within this, it’s important to scrutinize the building’s master insurance policy and compare it with the damages that you may need to cover within your space. This is a cover for the facilities held in common by the condo-association. This will usually not cover damage that occurs inside your specific home.

Insuring of valuables

Hurricanes destroy anything within their path and infrastructural damages are obviously not the only risk. Make sure that all of your possessions are sufficiently insured. If the hurricane that hits is a big one, then you may have to replace all your furniture, clothing, appliances, valuables, and any other personal possessions. This can burn a huge hole through your pocket if you are not adequately insured. Start your insurance planning with determining the value of your things and providing cover for those. After the event, a home inventory will also accelerate insurance claims and provide a proof of loss which is handy for tax or disaster aid purposes.

Consider living expenses

Additional Living Expenses, or ALE, is important for the extra costs you may need to face in case you need to live somewhere else during repairs. ALE covers hotel bills, meals, and other reasonable expenses that you may be used to incurring. Often, the ALE policy has a limit, say 20% of the amount of insurance of the structure of your home.

Underestimating the wrath of mother nature can prove to be a costly mistake. Over the past few years, storms such as Katrina and Maria have taken a lot of lives and been responsible for more than $250 billion in damages. To protect yourself from incurring heavy losses, it is a must to review your insurance policy before hurricane season strikes. Are you ready?