What Is Hurricane Insurance?
Hurricane insurance doesn’t exist as a distinct, standalone policy. The term generally refers to a specific hurricane deductible on a homeowners insurance policy, which is an additional amount a homeowner needs to pay before the insurer covers the damage caused by a hurricane. This deductible, typically a percentage of the property’s value, is common in 19 hurricane-prone states and the District of Columbia.
Hurricane insurance may also encompass specialized types of catastrophe insurance that cover flooding or extreme winds—elements that often inflict the actual damage during a hurricane. These policies are particularly common, and occasionally mandatory, in high-risk hurricane states like Florida and Texas.
Key Takeaways
- There is no specific, stand-alone hurricane insurance.
- Coverage for damage induced by hurricane waters or winds is provided by flood insurance or windstorm insurance.
- Many homeowners insurance policies in coastal states include a hurricane deductible, an extra out-of-pocket expense that policyholders must incur before coverage activates.
Understanding Hurricane Insurance
Hurricane deductibles are separate from regular homeowners insurance deductibles and are calculated based on a percentage of the home’s value. Unlike regular homeowners insurance policy deductibles, which have a fixed dollar amount (e.g., $500 or $2,000), hurricane deductibles might range from 2% to 5% of the home’s insured value, translating to $2,000 to $5,000 for every $100,000 in home coverage.
Hurricane deductibles were first introduced in 1992 in the aftermath of Hurricane Andrew’s extensive damage in South Florida, leading to substantial losses for homeowners insurance companies. They became more widespread after Hurricane Katrina in 2005. During times of financial strain, insurance companies rely on reinsurers, yet even these entities struggled under enormous losses post-hurricane. Consequently, insurance companies initiated hurricane deductibles in 19 coastal states and Washington, D.C.
For a hurricane deductible to apply, there generally must be a named hurricane in the area. Occasionally, a severe tropical storm might trigger the deductible as well. The deductible remains in effect until the storm is downgraded, with regulations varying by state.
In some cases, homeowners might be subject to a windstorm deductible instead. This deductible applies to damage from any high wind type and can be slightly lower than a hurricane deductible, sometimes as low as 1% of the property’s insured worth.
States Where Hurricane Deductibles Apply
The states and regions where hurricane deductibles apply include:
- Alabama
- Connecticut
- Delaware
- Florida
- Georgia
- Hawaii
- Louisiana
- Maine
- Maryland
- Massachusetts
- Mississippi
- New Jersey
- New York
- North Carolina
- Pennsylvania
- Rhode Island
- South Carolina
- Texas
- Virginia
- Washington D.C.
Policies Offering Hurricane Coverage
Homeowners should be aware that even after paying a hurricane deductible, coverage gaps may exist. Most homeowners policies exclude flooding from external natural events, such as hurricanes. Property owners, therefore, need a separate flood insurance policy to cover water-related destruction or damage. Additionally, while standard homeowners policies cover some wind-induced damage—like shingles being blown off a roof—homeowners in some states might require separate windstorm insurance.
In hurricane-prone states, homeowners insurance often won’t cover wind-related damage, necessitating a separate windstorm insurance policy. Windstorm insurance is not only for hurricane-related issues but also covers damages from tornadoes, cyclones, and other high-speed winds.
How Hurricane Deductibles Are Calculated
Depending on the state, insurance companies generally dictate the level and applicability of hurricane deductibles, but they are subject to state regulations. For instance, Rhode Island caps hurricane and windstorm deductibles at 5%. In Florida, home to frequent hurricanes, state law mandates certain requirements, including a $500 flat-rate hurricane deductible or percentages of the insured home’s value (2%, 5%, or 10%).
In some cases, homeowners may be eligible for lower premiums if they implement hurricane damage mitigation improvements, such as installing storm shutters or using hurricane-resistant laminated glass windows and doors.
Are Wind and Hurricane Insurance the Same?
Windstorm insurance and hurricane insurance are distinct. Windstorm insurance specifically covers damage caused by wind. While no exact
Related Terms: Reinsurers, Catastrophe Insurance, Storm Shutters, Hurricane-Resistant Laminated Glass, Financial Advisor.
References
- Insurance Information Institute. “Background On: Hurricane and Windstorm Deductibles”.
- Insurance Information Institute. “Hurricane insurance FAQ”.
- “2018 Rhode Island General Laws, Title 27 - Insurance, Chapter 27-76 Weather Related Losses, Section 27-76-2 Hurricane Deductibles, Triggers and Policyholder Notice”.
