Home > Insurance Blog > Hurricane Season and Your Homeowners Insurance: Do You Have A Hurricane Deductible?
Hurricane Season and Your Homeowners Insurance: Do You Have A Hurricane Deductible?
Posted by Donald J. Medeiros Insurance Agency on
Every year the entire eastern seaboard is either threatened or ravaged by hurricanes, tropical storms or tropical depressions during what is considered hurricane season which runs from June 1st through November 30th.
In 2005, Hurricane Katrina had caused $41 billion dollars in devastation that the reinsurance companies realized they could not assume so much risk and that the primary companies needed to reduce their potential losses. Now with the increasing development along the coastal areas more homes are now at risk for severe windstorm damage. So to limit the exposure of catastrophic losses from natural disasters, most insurers are selling homeowners policies with mandatory percentage deductibles for storm damage instead of the traditional dollar deductibles, which are normally used for losses such as fire and theft. For example, in a case where a policy has a $1,000 standard deductible, the policyholder must pay the first $1,000 of the claim out of pocket. With percentage deductibles, they are based on the home’s insured value, so if a house is insured for $300,000 and has a 5 percent deductible, the first $15,000 of a claim must be paid out of pocket. Percentage deductibles can range from 1 percent to 5 percent of a home’s insured value. But in some states, policyholders may have the option of paying a higher premium in return for a traditional dollar deductible, depending on how close to the shore they live. The details of a hurricane deductible will be spelled out on the declaration page of a homeowners’ policy.
Now there are two kinds of wind damage deductibles, hurricane deductible, which applies to damage solely from hurricanes and there is windstorm or wind/hail deductible, which applies to any kind of wind damage. In some coastal areas with high wind risk, hurricane deductibles could be higher. The amount that the homeowner will pay depends on the home’s insured value and the “trigger” which is determined under what circumstance, hurricane or windstorm, will the deductible be applied. Hurricane deductibles are “triggered” only when there is a hurricane or a tropical storm that the National Weather Service (NWS) “names” a tropical storm or a hurricane and declares a hurricane watch or warning or defines the hurricane’s intensity.
Here at Donald J. Medeiros Insurance Agency our goal is to try to help our viewers by suggesting solutions for all insurance needs. By no means can we address each reader’s specific concerns in every incident. So, we strongly advise to check with an insurance representative to address your specific policy needs. However, you can also contact us for any questions or concerns and we will be happy to help you. We are able to offer a complete line of personal & commercial insurance products for all of Massachusetts, Rhode Island and New Hampshire.