Do you have enough hurricane insurance coverage?

Emmet Pierce

To ensure the protection of homes and property during the 2013 hurricane season, residents of coastal communities from Texas to Maine should make sure they have adequate home insurance coverage.

Hurricane season runs from June through November. According to the National Oceanic and Atmospheric Administration NOAA), about 45 million residents face possible hurricanes in Gulf Coast states and along the Eastern Seaboard.

Hurricane insuranceNOAA says oceanic and atmospheric conditions in the Atlantic basin are expected to produce several strong hurricanes in 2013. According to the agency's Atlantic Hurricane Season Outlook, there is a 70 percent chance that there will be between 13 and 20 storms with winds of 39 mph or higher. Between seven and 11 of these storms could become hurricanes, with winds of 74 mph or higher. Three to six of them could turn into major hurricanes, with winds of 111 mph or higher.

Hurricanes are tropical cyclones or severe storms. The widespread damage caused by Superstorm Sandy last year illustrated the need for homeowners to know how much coverage they have before a hurricane strikes. In addition to reading your policy, you should take any questions you have about coverage to your insurance agent, says Amy Bach, executive director of the United Policyholders consumer group.

"Find out what your policy covers and excludes," Bach says. "Don't wait until you have a loss to fill gaps in your protection."

Do actual cash value policies provide enough hurricane insurance coverage?

Bach says consumers should avoid actual cash value ACV) home insurance policies. These policies typically have lower premiums than standard home protection plans. However, if a loss occurs they will pay only what your property is worth at the time of your claim, less depreciation for age and wear.

For example, if your home's furniture were destroyed, a sofa that cost you $2,000 three years ago might be worth only $1,500 today. When you go to buy a new sofa, you'd have to make up the $500 difference out of your own pocket. With a standard policy, your insurer pays the full cost of replacement.

When structural damage is extensive, ACV policyholders can get stuck with bills totaling thousands of dollars. Chris Hackett, director of personal lines for the Property Casualty Insurers Association of America PCIAA) trade group, says homeowner policies with full replacement costs make the most sense for people who live in hurricane-prone regions.

"People may be less satisfied with the claims adjustment process -- and understandably so -- if they don't get enough money to replace their personal property," Hackett says.

Bach agrees. "Make sure you have full replacement cost coverage for everything," she says.

Like homeowners, renters need insurance to protect themselves from hurricanes. This need often goes unrecognized, however, says Michael Barry, a spokesman for the Insurance Information Institute III). A landlord's home insurance policy typically will cover a building's structural damage, but not damaged property that belongs to tenants, he says. Renters often underestimate the value of their possessions.

What is a hurricane deductible?

Most homeowner policies have deductibles, an amount of money that you must pay before you can collect on a claim. Your deductible may be for a specific dollar amount or a percentage of the total amount of insurance on your home. Bach says many policies include hurricane deductibles, which shift some repair costs from insurance companies to consumers.

Hurricane deductibles were adopted by insurance companies to reduce their losses after homeowner claims from 1992's Hurricane Andrew led to large insurance company payouts. Such deductibles may be part of homeowner policies in Hawaii, the District of Columbia and the states that border Atlantic Ocean and the Gulf of Mexico. They apply only to damage caused by hurricanes.

These deductibles typically take effect when the National Weather Service names a tropical storm, declares a hurricane watch or warning, or defines a hurricane's intensity. According to the III, hurricane deductibles typically amount to between 1 and 5 percent the insured value of your home.

J. Robert Hunter, director of insurance for the Consumer Federation of America, says insurers have used hurricane deductibles to protect their profits at the expense of consumers. Insurers strongly disagree. They hold that they were forced to implement them in order to keep insurance rates affordable.

Barry notes that insurance companies had to win approval from state insurance regulators before hurricane deductibles could be enacted.

Information about hurricane deductibles in your policy can be found on the declarations page. If you have such a deductible, Bach suggests that you set aside enough money to pay it if the need arises.

Does your home insurance cover flooding?

One of the lessons of Superstorm Sandy was that high water can occur in areas where there is a low risk of flooding. While winds do a great deal of the damage during hurricanes, NOAA says drowning is the single greatest cause of death. According to the PCIAA, inland flooding can occur as far as 500 miles from the site of a hurricane.

Hackett notes that flooding isn't covered by standard home insurance policies. Flood coverage is available from the National Flood Insurance Program NFIP) and from some private insurance companies. The cost of such insurance is based on your risk, so if you live in an area where floods are likely to occur, it may be costly.

You can determine your flood risk online at

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