There are many things to consider when purchasing a home, including making sure that your new investment is properly insured. One of the most critical factors in considering how a home is insured is where the home is located. Is your new home located in a coastal area? If so, there are obstacles that must be properly understood when choosing your Homeowner’s Insurance Carrier—one of which is the difference between a “wind” deductible and the more common “hurricane” deductible. Here’s what you need to know, from Griff Harris, CIC, President of Griffith E. Harris Insurance Services, LLC in Greenwich, CT.

What is a “hurricane deductible”?

A hurricane deductible is a deductible that applies to damage sustained from a hurricane.
Standard homeowner’s deductibles for fire, theft and many other types of losses included in the policy are stated as dollar amounts. Hurricane and wind deductibles, on the other hand, are generally calculated as a percentage, and vary from 1% to 5% of the home’s insured value. For example, if a home is insured for $900,000 and the policy includes a 5% wind deductible, the first $45,000 of any covered wind claim must be paid by the policy holder (5% X $900,000 = $45,000).

Each state’s insurance department will have their own distinct rules; CT and NY are two states that allow insurance companies to apply hurricane deductibles. In some coastal areas with high wind risk, insurers may require hurricane deductibles higher than 5 percent. Whether a hurricane deductible applies to a claim depends on the specific “trigger” picked by your home insurance company or state insurance department. Triggers vary by state and insurer. They usually apply when the National Weather Service upgrades a tropical storm to a hurricane, issues a hurricane watch or warning, or defines a hurricane’s intensity. As a result of the storm activity of recent years (including Hurricane Irene in 2011 and Superstorm Sandy in 2012), many Homeowners Insurance Carriers now include a “wind” or “hurricane” deductible.

What is the difference between a “wind deductible” and a hurricane deductible”?

  • Hurricane Deductible: applies to damage sustained from a hurricane. Some insurance companies include a specific “mile-per-hour” wind speed, while others state that the hurricane must be designated by the National Weather Service or the National Hurricane Center. As a result, this form is more appealing.
  • Wind Deductible: is more penalizing than a hurricane deductible. A wind deductible applies to any wind damage, and is not limited to a storm that meets the definition of a hurricane or a particular “mile-per-hour” wind speed requirement. This form will impose the larger “out of pocket” cost to the policyholder for ANY AND ALL Wind Claims.

It’s very important to review your insurance with an insurance professional who will ensure that your home is properly insured with the best terms and conditions available in the marketplace. For more detailed information on these topics, please contact Griffith E. Harris Insurance Services LLC.

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