Hurricane Insurance: Do You Need It? Are You Covered Already?
The 2009 hurricane season officially starts today. As such, I thought I’d talk a bit about hurricane insurance. Unfortunately, according to recent reports, hurricane insurance rates are on the rise. Beyond increased premiums, issuers have been increasing deductibles and, in some cases, dropping policy holders in high risk areas.
These changes have been driven by a combination of higher than expected hurricane-related claims as well as increased costs related to reinsurance (i.e., insurance sold to other insurers to mitigate the risk of losses). Beyond this, the recent economic turmoil has put additional strain on insurance companies, resulting in pressure to increase premiums.
The good news (for us) is that we’re not really in hurricane country. The bad news is that many of you are, and thus might be in need of additional protection.
Do you need hurricane insurance?
In many cases, the damage caused by hurricanes will be covered by your basic homeowner’s insurance policy. That being said, an increasing number of policies actually exclude hurricane-related damage, in which case you’ll need to buy additional coverage. Do yourself a favor and check your policy now instead of waiting until it’s too late.
Note that, even if you do have coverage, you’ll still need to keep a decent amount of cash on hand to protect yourself. The reason for this is that the deductible for hurricane-related damage is typically a percentage of your home’s value, and can be quite high in some cases.
What about flood insurance?
Another extremely important point is that hurricane coverage is generally limited to wind damage, and thus does not cover damage due to a possible storm surge or subsequent flooding. As such, you’ll need to purchase flood insurance if you wish to be fully protected.
Something else to consider here is that, while most flood policies cover the costs associated with repairing/replacing the structure of your home and your possessions, they do not cover alternate living arrangements if you’re forced out of your home during the repairs. If this might be an issue for you, you’ll either need additional coverage, or you’ll need to beef up that emergency fund.
Other considerations
Finally, given the potential for water intrusion during and after a hurricane, you should check to see if you’re covered for mold damage. Mold can be an extremely expensive problem to deal with, and many homeowner’s insurance policies explicitly exclude mold damage, or at least limit the coverage associated with mold claims.
Disclaimer: Discover is a paid advertiser of this site.
Reasonable efforts are made to maintain accurate information. See the Discover online credit card application for full terms and conditions on offers and rewards.
Modified on August 25th, 2011 - 9 Comments
Filed under: House & Home, Insurance
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
Related articles...
» Hurricane Preparation and Survival Tips» Things to Know Before the Hurricane Hits
» Renter’s Insurance Doesn’t Cover Floods
» Thoughts From the Cayman Islands: Bank, Banks, Banks
» Does Homeowners Insurance Pay for Removal of Fallen Trees?
» How to Save Money on Health Insurance
» 3rd Quarter Taxes Due; Hurricane Victims Get Tax Extension
» School Policies and the High Cost of Healthcare
Was this article useful? Please sign up to receive our content via e-mail:
9 Responses to “Hurricane Insurance: Do You Need It? Are You Covered Already?”
Leave a Reply
Top Cards by Category
The new Discover it card is out to change the way people think about credit cards. No annual fee. No overlimit fee. No foreign transaction fee & no pay-by-phone fee. No late fee on your first late payment. And Discover won't increase your APR for paying late.*
Bonus Miles: Earn 30,000 bonus miles toward Award Travel after you spend $500 on the Card within the first three months of Cardmembership. Earn As You Spend: Get 2X miles on Delta purchases and 1X miles for all other eligible dollars spent.
The new Discover it card is out to change the way people think about credit cards. No annual fee. No overlimit fee. No foreign transaction fee & no pay-by-phone fee. No late fee on your first late payment. And Discover won't increase your APR for paying late.*
The new Discover it card is out to change the way people think about credit cards. No annual fee. No overlimit fee. No foreign transaction fee & no pay-by-phone fee. No late fee on your first late payment. And Discover won't increase your APR for paying late.*
The new Discover it card is out to change the way people think about credit cards. No annual fee. No overlimit fee. No foreign transaction fee & no pay-by-phone fee. No late fee on your first late payment. And Discover won't increase your APR for paying late.*
The new Discover it card is out to change the way people think about credit cards. No annual fee. No overlimit fee. No foreign transaction fee & no pay-by-phone fee. No late fee on your first late payment. And Discover won't increase your APR for paying late.*
The SimplyCash(R) Business Card from American Express aims to help your business succeed with a generous cash-back rewards program. Many businesses can benefit from cash back categories such as U.S. office supply stores, wireless telephone services purchased directly from U.S. service providers and U.S. gas stations. This card not only offers a low introductory purchase APR but also doesn't charge an annual fee.
The new Discover it card is out to change the way people think about credit cards. No annual fee. No overlimit fee. No foreign transaction fee & no pay-by-phone fee. No late fee on your first late payment. And Discover won't increase your APR for paying late.*
- How to Become a Millionaire
- How to Get Out of Debt
- The Best Dollars I've Ever Spent
- How Our Estate Plan is Structured
- How We Paid Our Mortgage In Less than 10 Years
- Money Making Ideas
- How to Manage Your Asset Allocation with Multiple Accounts
- Consumption Smoothing - Save While the Saving's Good
- How to Save on Groceries
- How Much Life Insurance Do You Need?
- Eleven Great Books About Money
- Dave Ramsey is Bad at Math
- Dish Network Customer Service SUCKS
- $8,000 Homebuyer Tax Credit
- Pay Off Mortgage Early or Invest?
- How to Claim the First-Time Homebuyer Tax Credit
- Termite Control: Sentricon vs. Termidor
- How Much Should You Pay a Babysitter?
- Reduced Credit Limits? Share Your Experience
- Ethanol Blended Gas = Lower Mileage?
- $15,000 Homebuyer Tax Credit
- Buying Furniture off the Back of a Truck
- Will Mac OS X Lion Kill Quicken 2007?
How to save money on insurance
- Can you afford an international retirement living?
- How to help your family after you are gone
- Will Social Security be gone before I retire?
- Refund, or no refund?
- This battle of the sexes has no winner
- What to look for when buying an energy-efficient home
- The hidden savings in a rent payment
- How to save money on vacations using social media and new technologies
- How to budget without regular paychecks
- What do you do with your windfalls?
June 1st, 2009 at 7:17 am
The funny thing with property and casalty insurance is that the people who need the insurance the most, usually can’t get it. As you mentioned, they get dropped.
To understand why– think about the business model: collect premiums from as many people as possible and hope not as many have claims. How to be more profitable? Collect more premiums and pay out less . . . How to payout less? Don’t take premiums from people most likely to someday need a payout!
June 1st, 2009 at 9:41 am
Another thing to watch for in your insurance policies is whether or not they pay for damages due to “temperature change”. I am from New Orleans and my family owns a large restaurant there in the French Quarter. While we were very blessed with limited damage from Katrina we did lose lots of wine due to sitting in hot buildings for 6 weeks (both at the house and restaurant). We were under the assumption this was covered by the various policies but both the restaurant and home owners policy had an obscure clause in it which excluded paying for damages due to “temperature change”. If you have items that could fall into this category this is something to look into.
June 1st, 2009 at 11:31 am
DDFD–
That is EXACTLY my problem with pooled risk programs. Companies that view human life as a road block to profit, ugh.
MLR
June 1st, 2009 at 2:02 pm
Like all insurance polices, you must account for an contingenices. It is best to talk with a representative directly at the company as well as your independent agent. Too many times people are not aware of what their policies do not cover.
June 1st, 2009 at 8:02 pm
In all probability, wind and hail (hurricane) insurance will likely drop in cost only if we have a series of hurricane seasons with no major storms.
If this happens, the insurance company profits should raise substantially and allow them to discount their prices and compete with others.
In the mean time, I’m paying an arm & a leg for my insurance on two properties in South Alabama. In the future, I will likely try and avoid coastal counties and at least buy two counties in from the coast.
June 2nd, 2009 at 2:52 am
I don’t know how people living in hurricane country do it. Us northerners get flak for the cold weather, but at least it’s not so terrifying! Where exactly does hurricane territory start? As far north as North Carolina, isn’t it?
June 2nd, 2009 at 11:33 am
Technically, hurricane territory is along the entire East Coast and Gulf Coast. Although, the southern most portion of the East Coast, NC and south, will bear the brunt.
Insurers are pricing the coverage more accurately now, as computer models are becoming more sophisticated. This is a big reason why prices are going up. Insurance companies are willing to insure any risk, provided they can accurate calculate and charge the right price.
June 3rd, 2009 at 2:37 pm
The unfortunate part is that while it is not soft, for large companies, insurance has not gone up dramatically. In fact, catastrophy insurance, earthquake, flood and hurricane has actually come down quite a bit in the last few years, even though it is extremely high still. My last company I was with we never bought earthquake coverage given that we could spend that money on other loss control techniques like bracing servers and upgrading buildings.
Think about the cost of a particular coverage and see if you can use those premium funds to pay for upgrades or improvements to your facilitity. The person who referenced the wine, they could probably get that exclusion removed for a price, or maybe you can pay for a generator. Remember insurance is just a tool in a “risk managers” tool belt!
February 16th, 2010 at 8:33 am
In Florida we have a state funded insurance company called Citizens Insurance. When insurance companies refuse to cover properties then the recourse is Citizens which is costly. The state and residents of Florida pick up the tab in case there is a major disaster and the insurance company cannot handle the claim. Everyone if Florida underwrites the costs now. We have had major insurance companies threaten to withdraw homeowners policies and leave the state of Florida because of the risk to their bottom line. Premiums keep going up and Up and UP!!!!