When you buy homeowners insurance you may think that you are covered for everything. Or as they say in the insurance industry, all perils. This is not the case. All insurance policies have exclusions or limitations and it is important to know what they are.
Here’s what you need to know to protect and fully insure your property from flood and hurricane damage.
What does “Water Damage” Mean to Your Home Insurance Company?
You might think that any time your house gets wet it counts as water damage. However, insurance companies classify very specific types of damage as water damage — and flood damage is not one of them.
To get your insurance company to cover water damage it typically has to be caused by a leak in your house. For example, it could be caused by a broken pipe, air conditioner, or laundry machine. Your insurance company typically won’t pay to replace your broken pipe or appliance that caused the leak, but they will pay to replace the parts of your home that have been damaged by the water.
Confused? Read more about water damage.
Flooding from a Water Backup
There’s one kind of “flooding” that home insurance sometimes covers: Water Backup Damage. This happens when a clog or heavy rain in your city sewer pipes cause water to overflow and back up into your home.
The source of the water is not from inside your home, so it’s not usually covered on a standard home insurance plan. However, you can purchase additional coverage on your homeowners insurance policy that protects against this hazard.
Flood Insurance is Not Included in a Standard Home Policy
Most of the people who buy flood insurance are required by their lenders because they live in a flood plain. If you live outside of a flood plain, you can still buy this coverage. It’s cheaper than homeowners insurance: as low as $100/year in low-risk zones.
You may buy up to $250,000 of coverage for your home and $100,000 for contents. Each coverage has a different deductible. The minimum deductible for $100,000 is $1,000. For amounts or coverage above that, it is $1,250.
Don’t wait until the last minute!
There is a 30 day waiting period before flood coverage becomes effective. That stops people from waiting until floodwaters are rising to buy coverage.
Flood insurance typically doesn’t include coverage for ALE (additional living expenses).
It also doesn’t usually cover damage to basements. This is especially good to know if you have a finished basement. You won’t get coverage for any improvements done to your basement.
Hurricane Insurance – 3 Things to Know
1. Storm surge and flooding from hurricanes isn’t covered
Flooding damage from a hurricane will only be covered through a flood insurance policy. So, even though the flooding was caused by a hurricane, you’ll still need a flood policy if you want to be covered.
2. Wind damage is usually covered — unless you live in a high-risk area
In most areas, wind damage from a hurricane is covered by a standard, comprehensive homeowners insurance policy. However, if your home insurance is a “named peril” policy and only covers specific perils (such as fire and burglary) you might not be covered. You may also not be covered if you chose to waive windstorm coverage to save money on your policy.
Coverage for high-risk areas
In certain high-risk coastal areas, such as parts of Louisiana, Texas, and Florida, you may be required to purchase a separate windstorm policy, separate from your insurance policy. This is because the chance of windstorm damage is so high, that many insurers wouldn’t provide any coverage if they had to include it. In these areas, there is usually an association set up by the state to provide coverage where private companies won’t venture.
Here are examples of associations offering windstorm coverage — and often hail damage, too — for homeowners who live in high-risk coastal states and can’t buy it elsewhere:
|Alabama: Alabama Insurance Underwriting Association|
Connecticut: Coastal Market Assistance Program
Delaware: Insurance Placement Facility of Delaware
Florida: Citizens Property Insurance
Georgia: Georgia Insurance Underwriting Association
Louisiana: Louisiana Citizens Property Insurance Corp
Maryland: Maryland Joint Underwriting Association
Massachusetts: Massachusetts Property Insurance Underwriting Association
|Mississippi: Mississippi Windstorm Underwriting Association|
New Jersey: New Jersey Insurance Underwriting Association
New York: New York Property Insurance Underwriting Association
Rhode Island: Rhode Island Joint Reassurance Association
South Carolina: South Carolina Wind and Hail Underwriting Association
Texas: Texas Windstorm Insurance Association
Virginia: Virginia Property Insurance Association
3. When wind damage is covered, it may require a separate deductible
In most hurricane-prone states, your homeowners insurance is required to cover windstorms. However, there’s usually a separate hurricane deductible that’s higher than your regular deductible. In these cases, your deductible may be between 2% and 10% of the value of your home. So, if you have a home insured for $400,000 and have a 5% deductible, you pay the first $20,000 of a loss from a hurricane and your insurance company picks up the rest.
Here are the states where home insurance carriers can apply a separate hurricane deductible to your policy:
Is My Home Covered If I Evacuate?
Yes. The same home, windstorm and flood insurance coverages apply whether you stay or evacuate your home, so be sure to act with safety during a storm. You should still prep your home for the storm and take your insurance paperwork if you leave to keep it safe and handy.
If you are in an area prone to flooding and or hurricanes make sure that you evaluate the coverage you have in your homeowners policy and think about adding flood insurance and/or the proper coverage for hurricanes. AgileRates.com can help you find a good agent who will take the time to help you get the policies you need to be covered during a hurricane.