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Hurricane Insurance: Are You Covered?

It's wind vs. water in many a hurricane insurance claim, so be sure you know the difference - and obtain both hurricane and flood insurance when protecting your home.

During hurricanes Katrina and Rita, many residents thought they bought hurricane insurance as part of their homeowners policy, which excludes damage from floods. While a typical homeowner’s policy covers wind damage, it only covers water damage that is a direct result of rain entering through a wind-damaged area. Depending on the policy, it will also cover resulting fire or vandalism, debris removal and repairs, and cash or replacement value of damaged property. Additional living expenses (ALE) may also be provided should it become necessary for you to stay at a hotel if your home becomes unliveable.

Insurance adjusters are specially trained to tell the difference between flood and hurricane damage. However, since qualifications vary among insurance professionals, you might find yourself protesting the claim if you think it has been wrongfully determined by an inexperienced adjuster. You can also file a complaint with your state insurance department or as a last resort hire an attorney to continue the fight.

To prepare for a hurricane and other disasters, the Insurance Information Institute recommends:

Buy Enough Insurance

  • Get enough insurance to rebuild your home and to replace all of your personal belongings. If you have made a major alteration or improvement to your home, or you have made significant purchases, notify your insurance agent so that the increased value is reflected in your policy.
  • Find out how much coverage you have for Additional Living Expenses (ALE). Additional living expenses coverage pays for the additional costs of living away from home, such as hotel bills and restaurant meals, while your house is being repaired or rebuilt. If you rent out part of your home, it would also replace lost income for the time you are not able to collect rent. Many policies provide coverage for 20 percent of the amount of insurance you have on your house and may be for a specified time period. Additional coverage is generally available for an extra premium.

    • Get the Right Type of Policy

  • Ask about flood insurance. Flood damage is not covered under standard home insurance policies. Insurance is available from the National Flood Insurance Program (NFIP) and can be purchased from the same agent or broker who provided your home or renters insurance. Additional information on flood insurance can be found at www.floodsmart.gov. Excess flood insurance is also available from some private insurance companies if you need more coverage than the $250,000 for property and $100,000 on contents that the NFIP provides.
  • Look into getting a guaranteed or extended replacement policy for the structure of your home. Extended replacement cost coverage pays a certain amount above the policy limit to replace a damaged home—generally 20 to 25 percent. A guaranteed replacement cost policy pays to rebuild your home regardless of cost. Both policies are designed to protect you in the event that after a major disaster the high demand for building contractors and materials pushes up the normal cost of reconstruction.
  • Ask about replacement cost coverage for your belongings. When insuring your possessions, you have two coverage choices. One is actual cash value, which replaces your possessions less depreciation. The other is replacement cost coverage, which replaces your property in today’s dollars—without a deduction for depreciation. It costs about 10 percent more, but provides more extensive coverage.

    • Create a Home Inventory

  • Have an up-to-date inventory of all of your personal property. A home inventory will help you purchase enough insurance to replace your possessions, speed the claims process and substantiate losses for income tax purposes. To make this task simple, the I.I.I. offers free, downloadable software and information on how to create and store your inventory at http://www.knowyourstuff.org .

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