The 2020 Hurricane Season Is Underway. Here's How Your Homeowners Insurance Can (and Can't) Protect You

As if America isn’t already reeling from coronavirus and civil-rights protests, it’s officially hurricane season. Tropical Depression Cristobal could reach Alabama, Louisiana and Florida as soon as this weekend. It’s time, then, for those who live along the Gulf and Atlantic seaboards to hope for the best but prepare for the worst. And at the top of your prep list should be making sure your insurance can stand up to a hurricane.

Why the focus on insurance? Because, contrary to what you might hope, governments are unlikely to make you whole if a hurricane wrecks your possessions. Most federal disaster assistance comes in the form of low-interest disaster loans from the U.S. Small Business Administration, which aren't available to homeowners and must be paid back. And while FEMA may provide disaster grants that needn’t be repaid, the amount you get is usually much lower than you need — in the tens of thousands, for losses that could easily run to the hundreds of thousands.

There is some good news: Your regular home insurance should protect you from one of the biggest risks, wind damage. Water should be covered too, unless the insurance company decides damage is covered by flooding, which requires a separate policy. But your car may only be protected if you have what’s called comprehensive coverage. And claims of any kind may be subject to a much larger deductible, which can run into the thousands or even tens of thousands of dollars.

Don’t panic, though. It’s not too late to get on top of all of this. While getting a new insurance policy can take weeks, according to Mark Friedlander, a spokesman for the Insurance Information Institute, changes to a policy can usually be made within a day or less.

But don't wait too long. Insurers typically issue moratoriums on even making changes to existing policies once a hurricane warning (or even a hurricane watch) has been issued for an area. It's best, then, to review your coverage now, so you're protected long before August, when any of the biggest hurricanes (like Harvey and Katrina) have struck in past years.

With many hurricanes sure to come in 2020, both in the Gulf and along the Atlantic, here’s what you need to know and do.

Even Northern States are Vulnerable

However sophisticated its modeling, the NOAA understandably can’t yet pinpoint where this year’s hurricanes might occur. However, history tells us that landfalls, the most damaging events, are most frequent in the lower mid-Atlantic and Gulf — a band that includes the Carolinas, Georgia, Florida, Alabama and Louisiana.

That said, no-one needs to remind homeowners along the New Jersey shore of the devastation caused by Hurricane Sandy in 2012, or Rhode Islanders of Hurricane Bob, which twice made landfall in the state in 1991. And a hurricane’s destruction can extend hundreds of miles from where it hits land. For example, Sandy (admittedly an historically huge hurricane) caused property damage as far south as Virginia and West Virginia, and as far inland as Ohio.

Deductibles Are Usually Much Higher for Hurricane Damage

Wind is a key destructive force wrought by a hurricane and, in almost all states, regular home insurance covers wind damage. However, in almost all coastal states (including the three now in Cristobal’s path), your regular deductible won’t apply once a storm warning is issued. And the hurricane deductible will almost certainly be higher.

As the Insurance Information Institute points out, for hurricane coverage, the regular fixed deductible for a home-insurance policy, typically $500 or $1,000, is usually supplemented by one based on a percentage of the home’s value. A hurricane deductible is different. Rather than being a flat sum, it's a percentage, and the base to which the percentage is applied is the property’s full value, rather than the cost of repairs.

If you lose your home to a hurricane, the cost of your deductible can become a major expense. Let’s say you owned a $600,000 coastal home that is flattened by wind in a hurricane and is covered by a policy with a 3% hurricane deductible — a figure that's in the middle of the typical range of 1% to 5%. You’d be on the hook to pay the first $18,000 of the home’s replacement cost.

How to hurricane-proof your homeowners’ coverage:

Understand your coverage. The trigger for when hurricane deductibles apply, and other details, vary between states. In Florida, for example, the higher deductible applies as soon as a hurricane warning is declared, where in Connecticut and some other states, winds must reach hurricane strength (74 mph or more) before the special deductible kicks in.

In some states, the percentage of deduction allowed isn’t regulated, where in others it is. Ditto for hikes in the deductible, which can often be raised at any time — but Louisiana generally disallows a homeowner’s deductible to be increased if it’s been in effect for at least three years. In Connecticut, insurance regulators must show that any special hurricane deductible is justified, based on a property’s distance from the ocean and actuarial data on property loss.

First, check your policy. If its hurricane provisions aren’t clear, contact the company. Before you do, though, you might check what’s allowed where you live by using the useful state-by-state listings from the Insurance Information Institute. Contact the state’s insurance commission as needed; the III guide has links to those resources.

Consider changing your deductible. 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. In some high-risk coastal areas, insurers may not give policyholders this option, making the percentage deductible mandatory.

Wind-strengthen your home for premium discounts. Some policies allow this, which can help amortize the cost of improvements such as shutters that can reduce losses if and when a hurricane strikes. Some states such as Alabama even mandate reductions when these improvements are made.

Turn to government programs if need be. In some areas at high risk of hurricanes, it’s difficult-to-impossible to find private insurance companies that are willing to insure homes, at least against wind damage. To fill that gap, most states have what are known as Beach Plans or FAIR (Fair Access to Insurance Requirements) Plans. This is insurance of last resort, provided through state-run pools that provide insurance to people who are unable to obtain insurance in the voluntary market. Beach Plans operate in specific coastal territories, defined by zip codes, counties or geography, where FAIR Plans are generally statewide.

Flood Insurance Requires a Separate Policy

Hurricanes, of course, also tend to involve a lot of water damage. If that water directly enters your home, and from the top, your homeowners’ insurance should cover the necessary repairs. If, however, the water touches the ground first, that’s technically considered to be a flood. And covering your home for flooding requires a separate insurance policy.

Here’s here’s how best to go about getting flood insurance, or at least to consider it:

Shop around, to both private and public insurers. If you know much about flood insurance, this advice may seem odd, since this product was long provided by very few insurers except the federal government, with its National Flood Insurance Program, which still exists and should still be included in your shopping process.

But now, says Insurance Information Institute spokesman Mark Friedlander, a lot of private insurers are offering flood insurance too, armed with increasingly sophisticated underwriting information and data analytics. Friedlander says these alternatives to NFIP might provide lower premiums and write new policies more rapidly — in as little as 5 days, he says, compared with the up-to-30 days that NFIP typically requires.

Check your FEMA flood map, but know its limitations. Maps issued by the Federal Emergency Management Agency detail the topography and flood risk of the country, and you can access the one for your neighborhood online.

However, despite an updating program, many of the maps are out of date, even woefully so, and they may not reflect the current flooding risk, given such factors as climate change. Also, be aware that factors other than the FEMA’s assigned flood risk increasingly affect premiums, according to Friedlander. Indeed, NFIP itself promises an overhaul next year of its own system for setting premiums, one that will use much of the data and analytics now used by private flood insurance companies.

Make Sure You Have Comprehensive Auto Insurance Coverage

The thousands of cars written off — mostly from flooding — in the wakes of Hurricanes Harvey and Katrina attest to how often these weather events damage or destroy cars. Unlike with your home, you don’t need a special auto policy to protect your car from the potential perils of a hurricane, including flooding.

What you do need, though, is what’s known as comprehensive coverage within your auto insurance policy. It’s the optional add-on that covers your car against such threats as theft, falling tree branches, and floods. Fortunately, about 80% of car-owners already have "comprehensive," according to Friedlander. But if you happen to have dropped it for cost reasons, consider adding it back if you live along a coast that’s prone to bad weather, at least for the six months that includes hurricane season.

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