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Hurricane deductibles: how do they work?

Posted On Tue, August 28, 2012

After Hurricanes Katrina, Rita, and Irene, residents were often surprised to find that they did not have adequate hurricane coverage under their homeowners insurance policies.

But how does hurricane coverage actually work, how are deductibles measured and how do homeowners know if they have property protection?

Today, most standard homeowners insurance policies include general coverage for hurricane damage. However, in order to maintain insurance rates across the board, insurance providers attempt to minimize risk by enforcing hurricane deductibles. Because hurricane property damage, such as trees falling on roofs or roofs flying off altogether, is so expensive, insurance companies simply can't afford to provide full coverage under a regular policy. Hurricane deductibles allow insurers to provide protection while subsidizing cost.

Hurricane deductibles are often offered as an option in homeowners policies. If homeowners opt to include a hurricane protection in their coverage package, they must pay a deductible, or a fixed amount, out-of-pocket. Deductibles are the amount of money paid by consumers before their policy kicks in, and they cost anywhere between three and 10 percent of the total cost of the insured property.

Some insurers do not offer hurricane coverage at all, in order to avoid the risk. If a homeowner has a policy with a provider that does not offer hurricane protection, he or she may need to purchase coverage separately, through a different provider.

Providers should always inform homeowners of whether or not they have hurricane coverage. In fact, it is unlawful for providers to remove any part of a policy - including hurricane protection - without informing policyholders in a written letter. If consumers are unsure whether or not they have coverage, contacting providers is the best way to get that information.

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