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Will Homeowners Insurance Cover Hurricane Damage?

  

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First an earthquake. Now, a hurricane.  Mother Nature has been busy wreaking havoc on East Coast homeowners. The damage from Hurricane Irene is more widespread than the Virginia earthquake, and with greater damage comes greater potential insurance headaches. Fortunately, much of the damage typically caused by hurricanes is covered by traditional homeowners insurance policies except for flood damage and fallen trees that do not damage a covered structure.

Here’s some more information on what homeowners can reasonably expect from standard insurance policies:

Floods

Floods — defined by insurers as any water that rises from the ground, including tidal waves, as well as destruction from rapid snow melts — aren’t covered by traditional policies. To get reimbursed for water damage, homeowners need a separate flood insurance policy, which is provided by the federal government but can be purchased through an agent or insurance company. According to the National Flood Insurance Program (NFIP), the average flood premium is about $600 annually, but rates go up to nearly $6,000 for the highest-risk coastal properties.

Many lenders won’t provide home buyers who are purchasing a home in a flood zone with a mortgage unless they’ve signed up for flood coverage. These homeowners can rest (relatively) easy; if their home floods, flood insurance will pay for that damage.

Even homes outside flood zones could be at risk of flooding. Based on statistics from NFIP, 31 percent of the properties damaged by floods are located outside of flood hazard areas (flood zones) as designated by FEMA. Without coverage, homeowners could end up paying thousands of dollars to clean up the damage.

Before you reach for the phone to call your insurance agent, you should know that there is a 30-day waiting period from the date you first purchase flood insurance to the date that policy takes effect.  The 30-day waiting period also applies to changes made to an in-force flood policy. For example, if you currently carry $200,000 in coverage for your home and decide to raise that amount to $250,000, you must wait 30 days before the change will take effect.  Separately, renters can also sign up to protect their belongings from flood damage.

Wind

Basic homeowners policies do, however, typically pay for damage caused by windstorms such as hurricanes and tornadoes — including broken windows, torn roofs and any interior damage from water falling into the home.  Likewise, if strong winds blow tree limbs or entire trees onto a home, garage or shed. (If a tree falls onto a car, many comprehensive auto policies will cover the damage.)

Property coverage also applies to an attached structure, such as a garage or deck as well as “other structures” that are unattached, such as a separate garage building or shed and swimming pools. The policy also includes coverage for damage to contents.

Typically, homeowners will have to pay their standard deductible while a hurricane deductible applies mostly to coastal properties.

Trees

Typically, if a tree hits a home or other insured structure such as a detached garage, a standard homeowners policy will pay for damage to the structure and its contents.  However, if a tree falls but does not damage any property, coverage might not be provided for tree removal.  Coverage for damage done by trees often depends on the specific coverage form and the company specific endorsement so there isn’t a “one size fits all” answer.  This video from the Insurance Information Institute provides some additional answers but it’s best to call one's agent to see what coverage their policy would provide.

Serious Damage

If a home becomes so damaged that it’s uninhabitable, most standard homeowner policies will pay for a family’s living expenses, including lodging and food, while the house is being repaired.   

Buying a Home as the Hurricane Hits

For home buyers who are just now preparing to complete the sale, the possibility of a hurricane wreaking havoc on their new home raises a big question: Who’s on the hook for the damage? If it occurs before the closing is conducted, the seller and his insurance policy has to cover the damages, according to the Insurance Information Institute. On the other hand, buyers who complete the sale before the hurricane hits are responsible. But in most cases, at the very least their basic home insurance policy should kick in.

Photo from TheDailyGrafton.com