Hurricane insurance: Do you have it? Need it? Six things to know.
Hurricane insurance has a unique place in the world of insurance. Just as hurricanes can do all sorts of damage to a house – from wind, flood, and rain – so hurricane insurance requires a multifaceted approach beyond typical homeowners insurance. Some hurricane damage is covered by homeowners insurance. Then there's a government-run program for flooding. As hurricane Irene heads for the East Coast, here are answers to six key questions:
1. Do I have insurance for hurricane damage?
Hurricane insurance is a little tricky. Private homeowners insurance does not cover flood damage, but it should cover any damage caused by hurricane winds. Even so, many homeowner policies have special deductibles for hurricane damage that are separate from the general deductible for other damages. While the general deductible is likely set at a dollar amount, the deductible for hurricane damage is often set as a percent of the hurricane costs. It's usually around 3 percent, says Ernst Csiszar, a professor of finance at the University of South Carolina in Columbia, although it can run as high as 5 percent of the damage costs.
Any hurricane damage from water, not wind and rain, is covered by flood insurance, which must be purchased separately through the federally run National Flood Insurance Program.
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