Hurricane Insurance: Is It Important? Why Do You Need It?

The National Hurricane Center named the first storm of this hurricane season before the season officially begun. Last month, Alberto was declared a storm a few days prior to the commencement of the June 1 season. A very active storm season is highly expected, so it’s important to know about the benefits and importance of hurricane insurance for properties surrounding the gulf and atlantic ocean.

Does my property insurance cover storm-related damages?

 Homeowners insurance will provide for some damages from hurricane winds. However, the general deductible for hurricane related damages is different from your average property insurance deductible. Typically, this deductible is in the form of a percentage ranging from 1-5% according to the Insurance Information Institute.

One major impact from a powerful storm is devastating flooding. This type of damage is not typically covered in a property insurance policy. Homeowners need to elect to obtain a flood insurance policy for coverage on this type of damage.

How does flood insurance work?

It’s important to check if you are considering purchasing a property in a storm zone that flood insurance is required by US law (for purchases with a federal backed mortgage).  For more information on obtaining flood insurance, see the official FEMA government website here.

Two different types of flood insurance exist – one policy for businesses and one policy for personal property. The different types of policies range for coverage for damages to personal item as well as structural damage. The price varies for flood insurance incredibly in storm targeted areas. A prospective insured can expect anywhere from $575 to more than $40,000. On average, a flood policy will cost $672 per year.

Are any options available for an uninsured whose property is damaged?

 Hurricane Harvey estimated between $25 and $37 billion dollars to homes throughout Texas and Louisiana. An approximate 70% of that damage is to properties that are uninsured according to Core Logic Investment Group.

When the President declares a State of Emergency, after your property endures property damage, you may apply for disaster assistance with the US government. Additionally, FEMA provides temporary relief for families up to $33,000 household. This type of relief can be used for repairs, renting a place to live, or other disaster-related expenses.

Review your homeowner’s insurance policy

One important step a property owner should take is to first assess and review your current property insurance policy. Determine whether the insurance policy covers for hurricane damage from strong winds. Look at the different deductions for these damages and whether they differ from your normal deductions.

Additionally, insurance companies will offer discounts for hurricane insurance if property improvements are made to the home. Homes with hurricane shutters offer homeowners a discount on their insurance policies as well as other discounts for mitigating improvements.

Make sure you don’t delay in purchasing a policy 

It may be too late when you actually want to purchase a policy. Many insurance companies will stop offering policies for sale when a storm is named. It’s important to purchase this policy before the hurricane season is in full swing. At the end of the day, you need to determine whether the risk of hurricane damage in the area you live in justifies the expense to purchase additional protection from damage.

Hurricane Insurance: Is It Important? Why Do You Need It? curated from Forbes - Real Estate