The Special Risks of Hurricanes and Floods

Hurricane Flood HouseThe end of summer seems to be peak time for natural disasters. Often, Labor Day weekend newscasts include stories about a hurricane, flood, tornado or wildfire happening somewhere in the United States.

 

Those who are dealing with the crises created by natural disaster need more than news coverage—they need insurance coverage. There are significant risks presented by natural disasters, which not only threaten homes and businesses but also endanger the health and lives of people in their paths.

Nowhere is the value of insurance more apparent than with natural disasters. But consumers must make decisions on important issues in order to insure their homes and possessions from the financial risk of hurricanes and floods:

Hurricane deductibles.  June through November is hurricane season in the United  States. Many remember the disastrous 2005 hurricane season in the south, when insurance companies  paid an estimated $41 billon for 1.7 million claims for damage to homes, businesses and vehicles in six states from Hurricane Katrina, according to the Insurance Information Institute. The Katrina disaster, combined with Hurricanes Rita, Wilma and Dennis, led to more than $57 billion of insured losses and 3.3 million insurance claims.

In recent years, insurance carriers have begun requiring homeowners to have a “hurricane deductible” where permitted by state insurance law. Designed to help insurers manage the significant financial risk they carry when paying thousands of claims in one geographic area, hurricane deductibles apply to damage solely from hurricanes.

Hurricane deductibles range from one to 5% of a home’s insured value. Coastal areas may be higher. The deductible is “triggered” based on the circumstances stated in the homeowners insurance policy language. For example, a 2% hurricane deductible for a home valued at $200,000 means that the homeowner would pay the first $4000 (2% x $200,000) of damage from a hurricane.

Like most insurance coverage, premiums are higher with a lower deductible. Policyholders may have the option of a traditional dollar deductible (such as $500 or $1000) in some states, although that’s not typically offered in higher-risk coastal areas.

Flood insurance. Flood damage is specifically excluded by homeowners and renters insurance policies. Flood insurance coverage, though, is available through independent insurance agents as a separate policy from the National Flood Insurance Program (NFIP), a federal insurance mechanism. In the 1960s, taxpayers often had to “bail out” flood victims, and Congress created the NFIP to make flood insurance available in communities that adopted floodplain management laws to reduce flood damage.

Today, NFIP insurance covers up to $250,000 for the structure of a residential property and $100,000 for contents. Premiums start at $348 for that coverage for a residential property and its contents. Some insurance carriers offer additional flood insurance (called “excess coverage”) above the basic policy limits or for people whose communities do not participate in the NFIP.

In 2008, a survey by the Insurance Information Institute found that 17% of Americans have a flood insurance policy. The national flood program reported that the average flood claim amounts to $33,000.

Hurricane deductibles and flood insurance are two insurance decisions that consumers might want to double-check. Contact your Trusted Choice® insurance agent. You can find an insurance professional at www.TrustedChoice.com.

Source: TrustedChoice.com, August 2009

Henry D Young Inc Insurance Agency

Henry D Young Inc is a Trusted Choice® insurance agent.  Visit our website at www.hdyoung.com or call us at 856-935-0845 for more information.

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The information in this note is meant as a guideline only.  There is nothing in this note that alters the coverage or interpretation of any specific policy.  Because some statements are generalizations, and because different companies’ policies contain slight differences, please refer to your specific policy.  Call our office before making any judgements or decisions concerning your particular situation and coverage that may, or may not, apply.

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Vacation Homes – Get the Coverage You Need

Vacation HomeWhen you insure a home, any home, you secure two types of coverage: property protection, which guards the home itself, surrounding property, structures and contents; and liability protection, which offers coverage against a claim or lawsuit resulting from bodily injury or property damage to others caused by an accident on your property or as a result of your personal activities anywhere.

While a separate policy will be needed to insure property damage to your vacation home, an endorsement on your primary homeowners policy usually is enough to extend the liability coverage.  However, keep in mind that having a second home increases the value of assets you have at risk.

You’ll want to work closely with us to make sure you have adequate coverage.  In fact, you may want to consider purchasing extra liability insurance, also known as a personal umbrella policy.  A PUP can increase the liability coverage on your home, vacation home or auto in increments of $1 million or more.

A vacation home doesn’t have to be an exclusive, eight-bedroom villa on the shore.  A camp cabin or even a permanently parked tariler are considered vacation homes that should be insured.

Whether you use it year-round, all summer, or only on weekends, you want your vacation home to be as well-protected as your primary residence.  Also, it would be nice if you didn’t go broke trying to insure it.  We can help.

LOCATION, LOCATION, LOCATION
Location is everything.  Those sunset views on the beach are lovely, but they also are the source of some particular insurance issues.  Insurance underwriters don’t consider the subjects of their coverage in a vacuum.  It’s not just three bedrooms, two baths, 2,500 sq. ft.; it’s three bedrooms, two baths, 2,500 sq. ft. on the coast.

For much of the Northeast, it’s particularly important to see if you have proper coverage for hurricane or windstorm damage.  Many homeowners policies may provide limited coverage on hurricane damage or windstorm protection.

Also, give us a call for information on flood insurance.  Homeowners policies do not provide flood coverage and the National Flood Insurance Program, which writes most flood policies, requires a 30-day waiting period before coverage takes effect.

If you want to discuss insurance to cover your vacation home, personal umbrella coverage, or flood insurance, please give us a call at 856-935-0845, or visit our website at www.hdyoung.com.

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Henry D Young Inc is a Trusted Choice® Insurance Agency

The information in this article is meant as a guideline only.  There is nothing in this article that alters the coverage or interpretation of any specific policy.  Because some statements are generalizations, and because different companies’ policies contain slight differences, please refer to your specific policy.  Call our office before making any judgements or decisions concerning your particular situation and coverage that may, or may not, apply.