Hurricane Insurance and Why You Need It

Hurricanes are the mightiest natural events on Earth. In size, they can exceed the entire state of Texas. In energy, they contain hundreds of times more energy than even the largest tornado. Unfortunately, these natural events readily turn into natural disasters. In 2005, Hurricane Katrina hit Florida and the Gulf Coast with a storm surge of nearly thirty feet and more rain than the area could handle. Much of New Orleans was underwater and took years to recover. All in, Hurricane Katrina caused approximately $110 billion in damage.

Similarly, Hurricane Harvey hit southern Texas in 2017. As a category 4 hurricane, Harvey brought more than forty inches of rain causing many areas of Houston to flood and displace tens of thousands of residents. All in, Hurricane Harvey caused approximately $125 billion in damage. While these are two of the costliest hurricanes in United States recorded history, smaller hurricanes threaten the southern and eastern parts of the United States every year. The United States Congressional Budget Office estimates that on average, hurricanes cause $28 billion in damage each year.

For many homeowners affected by Hurricane Katrina and Hurricane Harvey, their only option was to walk away from the property because the cost of repairing the house was simply too great without hurricane insurance. Many planned to use their homeowners insurance to pay for any damage caused by a hurricane. While homeowners insurance policies will cover hurricanes, they have special deductibles that can make an insurance claim for a hurricane damage extremely costly, such as requiring a certain percentage of the insured property’s value to be paid as a deductible. Additionally, most homeowners insurance policies do not cover flood damage. In New Orleans and Houston, flooding was the major cause of damage which left many homeowners without any coverage for the damage. To protect against hurricanes and the unique risks that come with them such as flooding, you need a specific bundle of insurance commonly referred to as hurricane insurance.

Hurricane insurance is not an actual policy – it is the combination of two underlying policies. The first policy is the homeowners insurance policy which covers direct damage from the hurricane such as wind damage. However, as noted, homeowners insurance does not cover flood damage, thus creating a coverage gap if a hurricane hits. The resolve this gap, flood insurance should be added to the bundle to protect against the flooding that comes along with hurricanes. By combining homeowners insurance with flood insurance, the homeowner is protected from direct hurricane damage such as windstorms and indirect hurricane damage such as flooding.

As a result, when considering hurricane insurance make sure to analyze the deductible for windstorms and hurricane damage as these can significantly change between policies, and be sure to get flood insurance to complement your homeowners insurance protections. Finally, if you’re looking at purchasing a property in hurricane affected areas, make sure to consider the cost of homeowners insurance and flood insurance as these can be very expensive in areas that are high-risk for hurricane damage and flooding.