PUNTA GORDA – October 10: This aerial view walks through floods that flooded the neighborhood after Hurricane Milton landed in Punta Gorda, Florida on October 10, 2024. The storm landed as a Category 3 hurricane in Florida’s Siesta Key area, causing damage and flooding in central Florida. (Photo: Joe Raedle/Getty Images)
Joe Raedle | Getty Images News | Getty Images
It’s officially a hurricane season, and early predictions show that it’s poised to be active.
Experts are when you look at your homeowner’s insurance policy to ensure you have adequate and appropriate kind of coverage, and make the necessary changes you don’t.
The National Oceanic and Atmospheric Administration predicts a 60% chance of “beyond normal” Atlantic hurricane activity during this season, ranging from June 1 to November 30th.
The agency predicts 13-19 storms with winds above 39 mph. Those 6-10 can become hurricanes that include major hurricanes in categories 3, 4, or 5.
You need to pay close attention to your insurance.
Charles Nice
Professor of Risk Management and Insurance at Florida State University
Hurricanes will face billions of dollars worth of damages. Accuweather experts estimate that the season has been “one of the most devastating and expensive things to date” to total property damage and economic losses from last year’s hurricane season.
“We are taking proactive steps to gather supply to plan and prepare for the storm before it is threatened,” NOAA’s National Weather Bureau Director Ken Graham said in a government report.
According to Charles Nice, professor of risk management and insurance at Florida State University, some of the checklists should include a review of your insurance policy and coverage you have.
“In addition to physically preparing with a radio, a battery and water, you need to be very careful about your insurance policy,” says Nyce.
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I want to know four important things. He said that if you have enough money to have risky property, how much the losses cost you, whether they are protected in the event of a flood, and if you have enough money in the event of an emergency.
Bob Passmore, vice president of the individual line at the American Property Casualty Insurance Association, agreed, “It’s really important to review your insurance every year at least, and this is a good time to do that.”
Insurance companies often suspend policy changes and suspend the issuance of new policies when a storm occurs. So now you can ensure proper coverage before you have an urgent need.
Experts say here are three things to consider when insurance for your home into hurricane season.
1. Check policy restrictions
First, let’s look at the restrictions on insurance companies. This represents the highest amount that an insurance company will pay for any covered loss or damage, experts say. Passmore said he wants to make sure the policy restrictions are correct and covers the costs of rebuilding the home.
Most insurers calculate insurance policy limits, Nyce said, taking into account the size of your home and the cost of building your area. For example, if you have a 2,000 square foot home and your area has a construction cost of $250 per square foot, the policy limit should be $500,000, he said.
However, there is a risk of insured shortages, especially if you haven’t checked coverage for a while. An increase in building costs or home renovations that are not reflected in the insurance company’s calculations may mean coverage delays the home replacement value.
Experts say repair and construction costs have been rising in recent years. Over the past five years, the cost of construction labor has increased by 36.3%, while the cost of building materials has increased by 42.7%.
Most insurers follow what is called the 80% rule. This means that coverage should be at least 80% of the replacement cost. If you are, you risk your insurance company paying less than your full claim.
2. Please check the deduction amount
Look at the deduction amount, or how much you will have to pay from your pocket if you file a claim, experts say.
For example, according to a report by Nerdwallet, if your policy has a $1,000 deduction and you file a $8,000 storm range claim, the insurance company will pay $7,000 for repair costs. You are responsible for the remaining $1,000.
According to Passmore, a common way to lower policy premiums is to increase the deduction amount.
Raising the deduction from $1,000 to $2,500 saves an average of 12% on premiums, according to a Nerdwallet study.
But if you do that, make sure you have cash on hand to absorb the costs after the loss, Passmore said.
Please do not stop the standard policy deduction possible. Look at any risk-specific provisions that can begin due to hurricane damage.
Wind deductions are usually out-of-pocket costs, a percentage of the value of your policy, Nyce said. As a result, they could be more expensive than your standard deduction, he said.
If a homeowner chooses a 2% deductible on a $500,000 home, he said out-of-pocket costs for wind damage could be up to $10,000.
“I’d be very cautious about choosing a larger deduction for the wind,” he said.
3. Assess whether flood insurance is required
Floods are not usually covered by homeowners’ insurance contracts. If you haven’t done it yet, consider purchasing individual flood insurance through the National Flood Insurance Program by the Federal Emergency Management Agency or through the private market, experts say.
According to FEMA, whether you live in a flood-prone area or not, it’s worth it if you live in a flood-prone area.
In 2024, Hurricane Helen caused massive flooding in mountainous regions like Asheville in Buncombe County, North Carolina. A recent report by the Swiss Re Institute found that less than 1% of households there were covered by NFIP.
If you decide to buy flood insurance with NFIP, don’t buy it last minute, Nyce said. There is usually a 30-day waiting period before the new policy comes into effect.
“When you think you need it like 24, 48 or 72 hours when a storm lands, you can’t just buy it,” Nice said. “Buy now before the storm forms.”
Understand what is protected under the policy. NFIP typically covers damages of up to $250,000 on housing property, with up to $100,000 in contents, said Loretta Waters, a spokesman for the Institute of Insurance Information.
If you are expecting more serious damage to your home, ask your insurance agent about excess flood insurance, Nyce said.
Such flood insurance is written by private insurers that cover losses beyond what NFIP covers, he said.
