Living by the beach is a draw for millions of Americans. But the coastal life comes with exposure hurricanes and their destruction.
Homeowners on the east coast, especially in the Southeast, endure the hazards of windstorms and flooding every year. But will your standard homeowners policy cover you in the event of damages? The answer is more complex than you may think.
A home insurance policy provides financial protection from damages such as fires, explosions, and in most cases, storms. There is a range of homeowners insurance policy types that provide varying degrees of coverage. An HO-3 policy is the most common form today for a single-family home, while an HO-4 or renters policy will only cover your belongings inside the home. Every carrier will have some variation in the coverage they offer to their customers, so it’s best to read your policy information carefully or reach out to an agent with specific questions.
Most lenders will require you to have a homeowners policy as a condition for approving the loan. They can even force place an insurance policy on your home if you fail to find adequate coverage or allow your coverage to lapse. Whether you have a mortgage or not, home insurance is a worthwhile investment on your property for the protections against costly hazards and damages.
Unfortunately, living in an area prone to hurricanes means your home is more susceptible to hazards like heavy windstorms and flooding. Many carriers refuse to offer homeowners insurance in these areas because of the increased risk. The remaining carriers offer policies with high premiums and deductibles. There are simple ways to improve your risk profile with carriers and find a policy with lower costs.
Homeowners in Florida can have a 4 point inspection done on their property at the same time as their full home inspection. These are stripped-down inspections for the insurance carrier’s benefit, and look at four specific areas of the home: roof, plumbing, HVAC, and electrical system.
While a 4 point inspection won’t affect your deductible, it plays a large role in whether a carrier decides to sell you a policy. If you fail portions of a 4 point inspection, a carrier may decline to cover you.
But these inspections offer valuable information if you want to identify serious potential hazards before a storm comes. Performing the necessary maintenance now will make your property look more favorable to insurance carriers, and save you the time and money on costly repairs after disaster strikes.
Wind mitigation refers to building techniques, especially in areas vulnerable to hurricanes, to keep buildings structurally sound in heavy winds. A wind mitigation inspection will tell your insurance carrier how likely your home is to suffer damage in the event of hurricanes.
There are a number of factors that go into a wind mitigation inspection. Inspectors need to look at all of the doors and windows of your home, the roof, and the attic. Each aspect can give you a credit toward your insurance premiums. Here is what they specifically look for:
Ideally your garage door should have a strong mounting system and tracks, and no windows. Otherwise, your garage is vulnerable to impact from projectiles.
Broken windows are dangerous in hurricane conditions even if you stay out of the affected room. They can change the air pressure inside the home and lead to your roof failing. To avoid this situation, all windows and glass doors should be made with impact-resistant glass and attached to the structure of the building. Otherwise, they may pop out of their frames or shatter in strong winds. You could also install hurricane-proof shutters.
These are your shingles, tiles, or anything else that covers the roof. Inspectors want to see that you’re using strong, resistant material that is installed properly. Insurance carriers prefer nails for installation over staples.
Hip roofs are preferred for hurricane conditions over gable or flat roofs.
Roof deck attachment
This refers to how your roof connects to the rafters of your home. It is a critical part of the inspection. Even a small failure in the roof deck attachment can lead to a big loss in the storm if your roof isn’t properly attached!
Roof to wall connection
This is another critical part of wind mitigation. Not only does it ensure your roof stays where it should, but a properly connected roof can transfer pressure to your walls and ease the stress brought on by strong winds.
Secondary water resistance
This is a relatively rare credit for homes to have. It refers to a second layer of waterproofing in the event your roof covering fails. Your home will either have it or not.
A wind mitigation inspection costs $100 on average. For most homeowners this more than pays for itself, leading to substantial insurance discounts or identifying problem areas to improve before a hurricanes strike. Your premium will never increase as a result of this inspection, so your financial risk is negligible.
Florida law requires insurance carriers to offer discounts for wind mitigation measures. This only encourages homeowners to have this inspection done. If you’re not in Florida, check with your carrier to see what discounts and credits they offer.
A typical wind mitigation inspection form looks like this. As of 2012, carriers require all inspections to come with photos for independent verification. Make sure your inspector has a camera out for your 4 point or wind mitigation inspection.
Insurance carriers in hurricane-prone areas will often have a separate hurricane deductible attached to their policy. This will apply once a year, and only during certain storm conditions that are outlined by the individual carriers. Some conditions include during hurricane season (June 1st through November 30th), or a certain time period before and after a storm is named. Companies can choose their own conditions, so check with your policy or an agent to be sure.
Hurricane deductibles come into effect when you have damage to your home from hurricanes. This is separate from your standard deductible. So you're expected to pay it even if you’ve met your standard deductible earlier in the year.
These deductibles are typically a percentage of the total coverage of your home. If you’re insured for $300,000 and you have a hurricane deductible of 2%, the dollar amount of your deductible is $6,000.
Carriers in any state on the East Coast or Gulf Coast can charge this separate hurricane deductible. They also may be subject to laws from each state affecting the kind of deductibles they offer. For example, Florida carriers must offer a $500 deductible option alongside 2, 5, and 10% deductibles, and in some cases offer an even higher percentage option. Other states have no such restrictions, and as a matter of policy can offer deductibles in a range of 1% to 5% or even more. Keep in mind that lower deductibles on an insurance policy typically mean higher premiums.
No homeowners policy covers damages from flooding. For coastal states, this leaves a large potential gap in coverage. The National Flood Insurance Program (NFIP) run by FEMA manages all flood insurance in the country.
While all properties are vulnerable to flooding, some areas have a higher risk than others. These flood zones can vary widely between towns and even neighborhoods, so don’t assume you’re relatively safe simply because your neighbor is. You may be in a different flood zone due to being that much closer to a canal.
The NFIP has a flood map to help you determine your level of risk in regard to flood damage. Be sure to check it often as flood zones can change without warning. If you’re in a high-risk area, your lender may require you to carry a flood insurance policy. If you’re not, it’s still worth considering. Just one inch of floodwater can cause up to $25,000 in damages.
It’s generally preferable to have flood insurance in the event of a disaster than to hope for federal disaster relief. The latter is only made available if the President declares a state of emergency and comes in the form of loans that must be repaid with interest. It may provide short-term relief in situations like major hurricanes, but lead to hardships in the future. It also leaves you unprotected if you experience losses due to any other cause of flooding.
You can buy a policy to cover the building only, contents only, or both. Flood insurance is relatively cheap: a $100,000 policy costs as little as $400 a year.
Learn more about flood insurance on the NFIP’s website here.
Some carriers offer home insurance in regions prone to hurricanes, but exclude windstorm damages entirely. In some cases, you may have the option to exclude windstorm damage for reduced premiums. Both situations leave a homeowner exposed to massive risks and damages to their property. Wind insurance exists as a separate policy in several states.
For most homeowners in Florida, their homeowners insurance policy is required to include coverage for windstorm damages. There are exceptions in certain high-risk areas on the coast. For homeowners in other states, you should make sure you are covered for windstorm damages and if not, find a policy to cover you.
As mentioned before, many insurance carriers are reluctant to cover homes in these regions and expose themselves to the risks of damage from hurricanes. This reluctance only increases with time, as each hurricane season shows more activity and costlier damages than the last.
Florida homeowners have a hard time finding coverage for their homes. This is especially true for those living in designated high-risk areas along the coastlines. To help with this, the state formed Citizens Property Insurance Corp as a “last resort” option for homeowners rejected by other carriers.
Other states will have their own state-run insurance programs for homeowners who couldn’t find insurance elsewhere. Alabama has the Alabama Insurance Underwriting Association, Texas has the Texas Windstorm Insurance Association, and Louisiana has Louisiana Citizens Property Insurance Corp, to name a few examples.
All condo owners in Florida are required to carry homeowners insurance with windstorm coverage as of 2011.
Mobile homes are more vulnerable to wind damage than other types of homes, and most major carriers won’t touch them. Owners’ options are limited to certain carriers who specialize in mobile home insurance, or state-run carriers like Citizens in Florida.
Those living in older homes may want an updated inspection to ensure their home is still up to code. These codes will vary by state. For example, Florida revised its building codes significantly in 2002, Alabama in 2015. Check the relevant building codes in your area, and consult with a licensed inspector if the results of your last inspection were obsolete. It’s also important to note that 4 point inspections and wind mitigation inspections are only good for five years. So be sure to keep those inspection results updated.
Hurricanes threaten a large portion of the United States. The details of insurance coverage can vary from New York to Florida to Texas. It’s best to review the fine print of your policy to know exactly what it does and does not cover. Be sure to reach out to your insurance agent with any questions.
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