The Coming Storm: Review Your Insurance Policy’s Hurricane or Windstorm Deductible Before It’s Triggered

With peak hurricane season arriving, it’s time to pull out your homeowners insurance policyto check if you have a hurricane or windstorm deductible, and make sure you understand how it works in the event you have to file an insurance claim, according to the Insurance Information Institute (I.I.I.).

“The time to understand how the claims process works is before you have a loss,” pointed out Jeanne M. Salvatore, senior vice president and consumer spokesperson at the I.I.I. “This includes having a clear understanding of the deductibles in your home insurance policy—especially wind and hurricane deductibles.”

A deductible is basically the amount “deducted” from an insured loss when a claim is paid by the insurance company. A deductible can be either a dollar deductible or a percentage of the total amount of insurance on a policy.

While standard homeowners deductibles for fire, theft and other disasters listed in the policy are usually a dollar amount, such as $500 or $1,000, hurricane and wind deductibles are generally calculated as a percentage and typically vary from 1 to 5 percent of a home’s insured value. So, if a home is insured for $300,000 and the policy on the structure has a 5 percent deductible, the first $15,000 of a claim must be paid by the policyholder.

There are two kinds of wind damage deductibles: hurricane deductibles; which apply solely to damage from hurricanes; and windstorm deductibles, which apply to any kind of wind damage.

Hurricane deductibles are triggered only when certain criteria are met (e.g., after the National Weather Service (NWS) has determined a Category 1 storm made landfall). The hurricane deductible triggers vary by state and insurer and usually apply when the NWS officially names a tropical storm, declares a hurricane watch or warning, or defines a hurricane’s intensity. Due to these differences, it is important to speak to your insurance professional to learn exactly how your particular hurricane deductible works.

Nineteen states and the District of Columbia have hurricane deductibles: Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia and Washington, D.C.

Hurricane and windstorm deductibles vary from state to state and from company to company, except in Florida where deductibles are set by state law.

Hurricane deductibles have made more private insurance coverage available in coastal states. A competitive market means more choice for consumers—with a variety of premiums, coverages and deductibles available you can shop around for the best insurance to fit your needs.

If you live on the coast, in some states you may have the option of paying a higher premium in return for a lower deductible depending on how close to the shore your residence is situated. In high-risk coastal areas, insurers often require the inclusion of a hurricane or wind deductible before selling a homeowners insurance policy.

“Everyone, no matter where they live, should make sure they understand what is and is not covered under their home insurance policy, as well as how their deductibles work” said Salvatore. “Homeowners who have questions about their insurance policy should contact their insurance professional while there is still time to purchase additional coverage or make other changes to the policy.”