Hurricane deductibles are a prime example of why it can be valuable to have an insurance agency specializing in homeowners insurance working with you.
Regulations, guidelines, and even definitions vary from state to state. In addition, insurance policies themselves can have nuances that significantly alter protection.
At Kin, we are both your insurance agency and your insurance carrier, and we want you to be as informed as possible about insuring your home. Let's dive into hurricane deductibles and answer the question, "Do hurricane deductibles apply to tropical storms?”
Understanding deductibles for tropical storms
A better understanding of deductibles for tropical storms and hurricanes starts with a basic understanding of the difference between hurricanes and tropical storms, and the definition of an insurance deductible.
Tropical storms vs hurricanes
A tropical storm is a weather system that displays a rotating pattern and includes high winds and heavy rains. For an event to be considered a tropical storm, it has to have maximum sustained winds between 39 and 73 miles per hour. When sustained winds reach 74 miles per hour, the National Oceanic and Atmospheric Administration declares that the tropical system has become a hurricane.
Tropical storms are “named storms.” That means they’ve received the official name based on an established procedure created by the World Meteorological Organization. A tropical storm will keep the same name even when it’s upgraded to a hurricane. The naming of the storm can be an important trigger for tropical storm insurance coverage.
Defining deductible
An insurance deductible is the amount of out-of-pocket expenses you, the insured, must pay before insurance proceeds are disbursed after a covered loss.
When wind damage occurs, one of three potential types of deductibles will be in effect. The three include a hurricane deductible, a windstorm/hail deductible (sometimes called a severe convective storm deductible), or an AOP deductible. AOP refers to “all other perils” and is generally the overall deductible for your homeowners' insurance policy.
Every policy has an AOP deductible that applies if there’s not a specific deductible for tropical storms. Whether or not your policy has a hurricane or a wind/hail deductible depends on your insurance company and the laws in your state.
For example, our:
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Florida home insurance policies have hurricane deductibles.
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House and Property insurance in states with hurricane risk has a hurricane and named storm deductible, plus a wind/hail deductible.
Application of hurricane deductibles to tropical storm scenarios
As we mentioned, the naming of a storm is often an important trigger for whether or not a deductible applies. That means the states where policies have hurricane and named storm deductibles (i.e., Louisiana, Texas, Georgia, Virginia, Mississippi, Alabama, and South Carolina), the deductible applies to wind damage caused by a tropical storm.
Florida is a bit different. Kin policies in Florida have a hurricane deductible, so a storm has to reach hurricane status and there must be a hurricane warning issued for any portion of the state for that deductible to apply.
But let’s say a hurricane warning is issued, but the storm hits Florida as a tropical storm. In that case, there’s a 72-hour window in which the hurricane deductible can still apply.
Another factor that could impact your out-of-pocket expenses is whether your deductible is per calendar year or per occurrence. Having a per occurrence deductible means you’re responsible for your deductible every time you make a new claim for damage caused by a different storm. With a per calendar year deductible, you no longer have to cover the deductible once you meet the deductible total for any subsequent claims in the same year. States like Florida and Louisiana have a per calendar year deductible.
If you don’t choose an option, an insurer's quote is typically based on a default deductible amount. That amount is typically noted on the quote you get when you apply as well as on your declarations page once you bind.
What is the deductible for hurricane damage?
The deductible for hurricane damage is first determined by what state law or the state insurance department require. Insurance companies then file their deductible amounts with the state.
For hurricane deductibles, the amounts are often a percentage of the Coverage A limits – so perhaps 2%, 5%, or 10% deductible on the home's replacement value. You can choose a higher percentage if you like, but that does mean you’re responsible for more of your repair costs should you have a loss.
The impact on insurance claims for tropical storm damage
In states where 2%, 5%, or 10% deductibles are options, the results on claims and out-of-pocket expenses can be dramatic.
For a home valued at $300,000, a 2% deductible could result in an out-of-pocket cost of $6,000. A 5% deductible would mean you pay $15,000 before your insurer starts covering your storm damage benefits.
We should note that higher deductibles do bring down your total premium. However, you want to think about your options carefully. A 10% deductible may mean your insurance costs less, but would you be able to pay $30,000 in repairs if your home experiences major damage?
What states have hurricane deductibles?
The potential for widespread damage from hurricanes and tropical storms is emphasized by the number of states with hurricane deductibles. These include:
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Alabama
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Connecticut
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Delaware
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Florida
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Georgia
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Hawaii
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Louisiana
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Maine
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Massachusetts
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Mississippi
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New Jersey
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New York
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North Carolina
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Pennsylvania
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Rhode Island
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South Carolina
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Texas
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Virginia
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District of Columbia
Although the methods by which these states determine their deductibles may vary, they are usually regulated by the state. Insurers are generally required to offer deductible options to homeowners.
How can I lower my hurricane insurance cost?
The first thing to know is that your home insurance includes coverage for hurricanes. So the answer to “How can I lower my hurricane insurance cost?” is the same as what you’d hear if you asked about lowering your homeowners premium.
A simple way to lower your hurricane insurance costs is to compare providers. You can also lower your hurricane insurance premium by raising your deductible. But again, this comes with risks. While you may be able to modify your deductible, you want to make sure you pick an amount you can afford to pay even after a hurricane or tropical storm.
The bottom line
Increasing your understanding is crucial when looking to protect your home from the damage of named storms. Hurricane and tropical storm insurance can be a bit complex because each state has its own way of regulating coverage.
What can you do to make sure you have the appropriate insurance for your situation?
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Learn as much about homeowners insurance coverage in your state as possible.
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Be proactive about exploring and choosing coverage options.
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Understand triggers that can impact hurricane and tropical storm coverage in your state.
We specialize in making affordable home insurance easy. We can discuss your home, its risks, and your state's hurricane insurance coverage. Contact us today for a no-obligation home insurance review and analysis. We can even provide a quick home insurance quote.
Knowledge is power when used properly. Let us use our experience to benefit you. Contact Kin Insurance today.
