Top 6 Hurricane Season Mistakes To Avoid

Stormy sky over a coastal area with text overlay: "Top 6 Hurricane Season Mistakes to Avoid" targeting insurance preparation.

Avoid These Home Insurance Mistakes This Hurricane Season

About 1 in 20 homes will have an insurance claim this year, but in areas vulnerable to hurricanes and severe storms, the percentage can reach much higher. Insurance premiums follow trends but are also based on fairly consistent data that tells a story.

For example, we know that the most common type of property damage claim is due to wind and hail. Fire claims are often costlier than wind/hail claims, but average flood claims — common with hurricanes — can be nearly as costly as fire claims.

Numbers tell us where to focus our attention when preparing for hurricane season. In this guide, we’ll discuss several common mistakes people make in policy structure or pre-storm preparedness. More importantly, we’ll examine the best solutions, empowering you to take control of your situation and be more prepared if this year’s storms come your way.

Let’s look at some of the most common issues (and their solutions).

1. Not Replacing or Repairing Your Roof

It’s no secret that hurricanes can damage roofs. Older or already damaged roofs are the most vulnerable when a wind storm rolls in. Homeowners are often lulled into a false sense of security because their roof doesn’t leak when it rains. However, high winds, flying branches, and debris seen with hurricanes put older or damaged roofs to the test, a test they often fail.

Many insurers now inspect roofs using drones or similar aerial imagery. Again, numbers are at the heart of it. Insurers know the claims associated with a worn roof can be much costlier than the cost of replacing the roof itself. This is also true for the homeowner because the homeowner pays a deductible for claims. Wind and hail claims often use a separate deductible. Hurricane claims also use a percentage-based deductible.

The costlier deductible for this type of claim, combined with the potential for increased premiums following a claim, makes replacing an older roof—before there is a claim—a more prudent choice. If your home has a 30-year roof, don’t wait until it’s 29.5 years old to consider replacement. Inspect your roof regularly and have a trusted contractor inspect inaccessible areas. The old saying, “The only way to be on time is to be early,” applies to roof replacement as well.

Aerial view of a home with hurricane damage to its screened enclosure, highlighting the importance of insurance preparation.

2. Choosing High Deductibles

Policy structures can vary slightly based on state or region. This is particularly true for deductibles. In simple terms, the deductible is the part of the claim paid by the insured. The deductible amount is ‘deducted’ from the claim settlement, making it an out-of-pocket expense for the homeowner if you have a loss.

Many insurers offer a fixed deductible for most claim types but use a percentage-based deductible for wind and hail claims as well as hurricane damage and damage caused by a named storm.

For example, you might have a $1,000 deductible for most claims but a 2%, 5%, or 10% deductible for wind, hail, or hurricane claims. A fixed deductible is easy to understand, but percentage-based deductibles are based on the rebuild cost of your home. The rebuild value creeps up over time as the cost of labor and materials increases. As a result, a higher deductible can be extremely costly if you have a loss.

For example, if your home has a rebuild value of $400,000, a 2% deductible means you’ll pay $8,000 of the claim. This structure, while expensive if you have a loss, is common. However, let’s consider a 5% deductible for the same home. Now, a loss results in a $20,000 out-of-pocket expense for the homeowner. A 10% deductible results in out-of-pocket costs that simply don’t fit the budget in some cases.

Review your deductibles with your agent to ensure that the numbers are realistic for your budget. In many cases, the premium savings may not justify the risk. Also, consider building a separate savings account to cover deductibles and other out-of-pocket expenses.

3. Not Enough Loss-of-Use Coverage

Loss-of-use coverage, also called additional living expense (ALE) coverage, is triggered if you have a physical damage claim that forces you to leave your home while repairs are completed. Following a hurricane, you might have a home with a fallen tree branch sitting in the living room or roof damage that allowed water to enter your home. In these situations, you’ll need to relocate temporarily while the insurer inspects and repairs the damage.

However, local building codes and the availability of materials can delay repairs. In addition, hurricanes cause damage throughout the affected region, which delays adjuster inspections and repair efforts.

The additional costs of hotels and eating out or renting a temporary space can add up quickly. Many policies use a default 10% ALE coverage. On a home with a $300,000 rebuild value, this means you’ll have $30,000 in coverage.

Discuss the loss-of-use premium costs with your agent. You might find that stepping up to a higher level of coverage fits your budget and is well worth the investment.

4. Mismatched Personal Property Coverage

When we think of hurricanes, we often think of roof, window, and siding damage. However, your belongings inside your home can also be at risk. The thing to consider in this case is the real value of your belongings and whether your policy reflects your coverage priorities.

In most households, personal property falls into two categories: valuables and used belongings. It often makes sense to insure valuables to their full replacement value, but your coverage for other personal property may not align with the true value. If many of the items in your home are older, you may be able to reduce your premiums by adjusting your coverage.

Personal property coverage typically uses a fixed percentage of your home’s rebuild value as a maximum coverage amount. In other words, it’s a largely arbitrary number. You also have a choice of replacement cost coverage or actual cash value coverage with many policies. The latter is more affordable because it pays based on a depreciated value based on age.

Talk to your agent to discuss your personal property coverage. You may be overinsured, or you may want to fine-tune your coverage to focus on the things most valuable to you. Often, the savings in one coverage area can pay for upgraded coverage in another area of your policy.

High-rise building with hurricane damage and bent palm trees, emphasizing the need for proper insurance preparation.

5. Not Adding Law and Ordinance Coverage

The dwelling coverage for your home is based on the cost of rebuilding your home from the ground up using like materials. Insurers use software to calculate the rebuild cost based on square footage, features, quality of materials, and local labor costs. What’s often unknown (until you have a loss) is which new building codes now apply. Your township or municipality may have enacted new building codes that can add to the rebuild cost of your home, a cost that isn’t reflected in your dwelling coverage amount.

Law and Ordinance coverage can boost your coverage amount, allowing it to expand up to an amount you choose if code compliance adds to the cost of rebuilding or repairing your home.

Review your Law and Ordinance coverage with your agent before hurricane season. Unexpected upgrades due to new building codes could cost thousands, particularly when repairing or rebuilding older homes.

6. Not Buying Flood Coverage

One of the largest risks from hurricanes centers on floods. We’ve all seen clips of flood waters rushing through streets and surrounding homes. Some of us have experienced the devastation floods can cause in person.

Average insurance claims amounts for floods are second only to fire claims, with the average flood loss reaching as high as $66,000 in some years. However, what many people don’t realize is that floods of this type are not covered by a standard home insurance policy. To protect against flood damage, you’ll need a separate policy.

FEMA and the National Flood Insurance Program (NFIP) use a specific definition for a flood when considering claims. In layman’s terms, you can think of a flood in this context as water that touches the ground before entering your home. By contrast, water damage from an inside source or caused by roof damage is covered by a standard policy in most cases.

Discuss your flood insurance needs with your agent. In many areas, private insurers have begun to offer flood policies or supplemental coverage for existing NFIP policies. In many cases, private insurers provide more cost-effective protection with fewer gaps compared to NFIP policies.

Review Your Policy Regularly With Your Agent

The best time to prepare your home for hurricane season is before it starts. While some aspects of preparedness center on maintaining the roof, siding, gutters, and nearby trees, it’s also essential to consider your coverage selections.

Most insurers recommend a full policy review with your agent once each year. Life changes, and our coverage needs often change as well. This periodic review gives you a chance to be sure your coverage meets your current needs and offers an opportunity to better prepare for the coming year.

Reach out to your agent to schedule a time for a review. The time invested in discussing your coverage could save you thousands if you have a covered loss.

Coastal Insurance Solutions Awards

About the Author

David W. Clausen is the CEO of Coastal Insurance Solutions. With over 20 years' experience and over 1 billion insured, David and Coastal Insurance Solutions are the recognized leaders in high net worth insurance. For the fourth consecutive year, David Clausen has been awarded Top Producer by Insurance Business America and the 2023 Agents of The Year by Insurance Journal. David is a trusted high net worth insurance expert who’s published more than 200 articles. His articles & press releases have generated over 500K pageviews and has been featured on blogs such as Google News, Yahoo Finance, CNBC, Market Watch, Fox, The New York Times, etc. David founded Coastal Insurance Solutions in 2001 after earning a BBA from the State University of New York College at Oswego.

IBA's Top Retail Broker 2023
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IBA's Top Retail Broker 2023
Digital badge for the 2023 Insurance Agents of the Year Award, featuring intricate design elements that symbolize excellence and achievement in the insurance industry.

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