Hurricane season is coming: how not to miscalculate with home insurance and not get paid because of destruction and floods
With spring warmer weather coming, homeowners may want to make sure they're prepared for the harsh weather that's likely to come soon. An integral part of this preparation is checking your insurance coverage. Why and to whom it is important, said the publication CNBC.
If you live in an area prone to hurricanes, tornadoes, floods, hail, wildfires, or severe storms, this is exacerbated by a warming climate. Therefore, it is important to know what types of weather damage your insurance covers and whether you need to pay additional premiums.
“Take the time to understand how your policy covers severe weather and natural disasters,” advised Steve Wilson, senior underwriting manager at Hippo insurance company.
The tornado season has already begun, and the Atlantic hurricane season will begin on June 1 and will last until November 30. Meanwhile, much of the western US is experiencing a drought that is fueling wildfires.
Depending on where you live and the weather typical of that area, your policy may cover some of the location-specific disasters, and state laws often dictate what is required of policies offered in the state.
It's worth noting that Florida's insurance industry is in crisis largely due to roof replacement schemes that lead to litigation and have cost insurers about $3,4 billion in losses over the past two years, according to Mark Friedländer of the Insurance Information Institute. .
In 2021, homeowner insurance premiums in Florida rose by an average of 25% compared to 4% in the rest of the US, Friedlander said. The Institute predicts an average increase of 30-40% this year, with many cases seeing increases of 100% or more.
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Regardless of where you live, there are things to look out for in your insurance.
What to look for
While many weather-related events are covered by the standard part of your policy, some are covered under another section that has a separate deductible.
If you live in a state on the east coast or near the Gulf of Mexico, chances are you have a hurricane deductible on your policy. Likewise, in states that are more prone to wind events, such as tornadoes, you are likely to have a deductible on them.
In any case, these amounts usually range from 1% to 5% (minimum $500) depending on the specifics of your insurance. Some homeowners may opt for an even more expensive franchise if available.
Keep in mind that for these percentage deductibles, the amount is based on the value insured, not the damage caused.
Thus, if your home is insured for $500 and you have a 000 percent hurricane deductible, you will be liable for the first $5 regardless of the total cost of damage.
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In addition, earthquakes are not covered by standard policies, even in quake-prone California. So you will have to purchase separate insurance. As a rule, this does not apply to other types of ground movement (eg landslides, sinkholes).
Don't overlook the risk of flooding
Flooding becomes more dangerous as sea levels rise and storms intensify. However, only 15% of homeowners are insured against flood damage.
“One of the most important hurricane protection measures that can be overlooked is flood insurance,” Wilson said.
If you are in a flood risk area, your mortgage lender will likely require you to have this insurance. However, according to the state's National Flood Insurance Program, one in four flood claims come from homeowners outside these areas.
You can get coverage either through a private insurance company or through a federal program (which is how most homeowners get a policy). However, there are exceptions and limitations to what is covered.
The average annual cost is $985, although this can vary greatly. The Federal Emergency Management Agency recently implemented a risk rating to more accurately assess individual flood risk, which leads to higher insurance premiums for some homeowners and lower ones for others, Friedländer said.
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