Welcome to hurricane season which runs from June 1 to November 30th. It’s a great time for Texas homeowners to take a few minutes to review their home insurance keeping in mind a hurricane or named storm can impact north Texas residents as easily as it does our coastal neighbors. Let’s address two key areas of your home insurance policy to review along with two other related policies.
Home Insurance: Review your wind, or wind / hail, deductible. This assumes you don’t have a separate wind policy. Wind coverage may be outlined in one of two deductibles:
- Wind / Hail
- Named storm
Most Texans are already familiar with the wind / hail deductible. This is usually specified as a percentage of the home’s insured value such as 1% up to 5%, which is the maximum most mortgage companies permit. If your home has an insured value of $200,000 and you have a 1% wind / hail deductible, you’ll be responsible for up to $2,000 of any repair to the home caused by wind damage before the policy takes over. For those with a 2% or higher wind / hail deductible, I recommend setting aside funds to cover the amount of the deductible should a hurricane strike our coastline.
The named storm deductible, also referred to as hurricane or tropical cyclone deductible, applies to any storm with a name, such as a hurricane or tropical storm. If your home policy has a separate named storm deductible, determine what is the lowest amount your carrier will write on your policy and that it doesn’t break your budget on the annual premium. I’ve seen a few policies in north Texas which default to a 2% named storm deductible, even from companies that will write a 1% deductible. By the time a hurricane reaches north Texas, it usually has been downgraded to a named tropical storm so this is a good exercise for north Texans to undertake!
Wind Insurance: Coastal communities such as Galveston, Corpus Christi, Brownsville, and others may have wind coverage excluded from their home insurance policy and require a separate wind policy. Like flood insurance, wind coverage can be written to cover the home only or it may be written to cover both the home and your contents or personal property. Having coverage on the home only doesn’t help much if you lose your roof and all your personal property is lost or severely damaged. Confirm you have coverage on both and enough to rebuild your home.
Flood Insurance: Flood insurance protects you financially whether the home is flooded by storm surge or from rising waters due to the heavy rainfall which accompanies a hurricane or tropical storm. You can have coverage only on the home or the home and its contents. If you live along the coast or in low lying areas inland, having flood insurance can protect you in ways even a home insurance policy can’t. Confirm you have coverage on both and enough to rebuild. If it will take more than $250,000 to replace your home, look into excess flood coverage. This can be a financial life saver!
What do you think? Share your questions, comments, experiences and any suggestions you have with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!