Recent history proves the growing need for Hurricane Insurance Programs. The Atlantic hurricane season in the US is an annual tropical cyclone period in the Northern Hemisphere that runs from June through November of each year. Since 1980, the average season has yielded 14 tropical storms, seven hurricanes, and three major hurricanes.
In 2022, experts forecast an extended-range forecast season that predicts an above-average hurricane season along the Atlantic seacoast. Their estimates for activity are 13–16 named storms, 6–8 hurricanes, and 2–3 major hurricanes this year.
Since 1980, the US has experienced 258 weather disasters, with the most damage caused by tropical cyclones totaling $946 billion, with an average cost of $22 billion per event. Hurricanes are also the cause of the most natural disaster-related deaths, with 6,593 recorded between 1980 and 2020.
What is Hurricane Insurance & Who Needs It?
Hurricane insurance is neither an individual policy nor a standard form of insurance. Instead, it is a term used to describe a combination of insurance policies that work together to protect homes and businesses from losses due to hurricane damage. Due to the severity and frequency of hurricane damage from water and wind, these perils require separate policies as integral parts of a hurricane insurance program.
Those who reside in a hurricane-prone zone should seek as much insurance coverage as possible because hurricanes can produce devastating damages that standard insurance policies usually exclude.
Types of Hurricane Insurance
Although, as mentioned, no actual "hurricane insurance" exists, a combination of wind, flood, homeowners, and property insurance creates a comprehensive hurricane damage insurance program. The following guide to hurricane insurance programs details the typical policies.
Windstorm policies cover hurricanes and other weather events such as tornadoes, cyclones, and high-speed winds. While most people residing outside of hurricane-prone regions find wind coverage included with their standard homeowners policy, it is an exclusion for those living in hurricane-prone areas.
Homeowners who live in hurricane zones should check if they need an additional endorsement or a separate deductible for wind damage. Individual coverages for windstorm and hail insurance are sold as respective policies or endorsements. Wind insurance is available through a state's Fair Access to Insurance Requirements Plan or a state's Beach plan.
Georgia, Louisiana, Mississippi, New Jersey, and New York provide insurance for hurricane damage. These states cover people living on islands and other difficult areas to reach by land or air. People living along the seacoast should be aware of these options.
Flood Insurance from FEMA
A Federal Emergency Management Agency (FEMA) report indicates that flooding occurs in 90% of natural disasters, including inland flooding, flash floods, seasonal storm flooding, and hurricanes. Standard homeowners and business property policies do not cover flood damage caused by a hurricane or other weather events. Therefore, a separate flood insurance policy is necessary to protect from water and storm surge damage from natural disasters.
FEMA manages most flood insurance. The agency makes coverage available from local agents who place the business through National Flood Insurance Program (NFIP). NFIP flood insurance policies provide insurance with maximum limits of $250,000 for property and $100,000 for contents.
The Flood Insurance Agency (TFIA)
TFIA is alternative private flood insurance that complements the National Flood Insurance Program with brokers offering exclusive commercial flood insurance programs such as the Flood Flex coverage through Amwins Underwriting. Its commercial flood insurance eliminates expenses traditional flood insurance omits. In addition, it endorses the policy to increase the loss payable for Coverage A: Building Coverage of a commercial building flood policy from 10% up to 100%.
Insureds receive a single payment for the covered flood loss and use it at their discretion for loss of income, additional expenses, depreciation, or their deductible.
First dollar primary building/contents coverage is available up to $10,000,000 for properties located in A, X, and V zones, including almost all coastal properties $5000, $50,000, $100,000, $250,000, and $500,000 deductible options. A rate-lock feature provides an insured with options to lock in pricing for up to three years, regardless of losses incurred. Policies are certified lender compliant, ensuring that all federally-backed banks and lenders will accept policies.
Even the most comprehensive homeowners insurance has exclusions for hurricane damage. Policy language varies between carriers. So, depending on location, particularly near the coast, it's crucial to understand what an individual homeowners policy does and does not cover to find the best hurricane insurance.
Residents of high-risk coastal states must nearly always purchase separate windstorm insurance. It is available from a local agent or state-run insurance pool. Sometimes it can be added as a rider to the primary homeowners policy.
CAT is the acronym for a catastrophic event property deductible and is unique and different from a standard property insurance deductible. Nineteen states have hurricane deductibles, including Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia, plus Washington DC.
Homes in Washington, DC, and those 19 States are vulnerable to hurricane damage and are subject to hurricane deductibles separate from their homeowner insurance deductibles.
A standard $300,000 homeowners policy has a typical $5,000 fixed deductible. However, it does not apply to the Hurricane deductible. Instead, insurers use two to five percent of the home's value to calculate the Hurricane deductible. That equates to $2,000 and $5,000 per $100,000 homeowners insurance coverage.
Named storm deductible
Hurricane deductibles are usually triggered by a named hurricane in the region, although severe tropical storms can also cause the hurricane deductible requirement. However, the hurricane deductible's timing remains in effect for any damage occurring before the weather system is downgraded. Each state has its own rules regarding Hurricane deductibles.
CAT wind deductibles typically range from one to five percent of a home's insured value. In the case of wind damage, the standard deductible would not apply, and the wind deductible would kick in instead. Some carriers use a CAT deductible for other wind and hailstorm events.
For underwriters to determine a deductible structure, they factor in an insured's risk profile, making it essential for policyholders to know what type of storms require a CAT deductible from their insurer.
Hurricane Insurance Programs for High-Risk States
Certain states offer separate windstorm and hailstorm insurance policies. Check your state to find if it has a Fair Access to Insurance Requirements Plan or a beach plan. For example, some states offer various insurance coverages insurance for their coastal residents.
In Florida, the Citizens Property Insurance Corporation (CPIC) provides flood and wind insurance to people who cannot buy insurance from another company. Florida's Citizens Property Insurance Corporation (FPIC) provides wind insurance for residents who cannot get coverage in the standard marketplace.
North Carolina Coastal Property Insurance Pool offers windstorm, hail, and other policies in 18 eligible coastal communities in North Carolina.
South Carolina Wind and Hail Underwriter's Association provides windstorm and hail damage insurance in some areas of South Carolina.
Texas Fair Access to Insurance Requirements Associations provides wind and hail coverage in some parts of Texas. Texas Windstorm Insurance Association offers wind and hail coverage to homes in 14 coastal counties and five communities in Harris County.
Hurricane Insurance Costs (and what factors affect the price)
The annual cost of a separate flood policy is about $800 and going up as FEMA rolls out a fairer methodology for ratings with higher-risk locations facing higher rates. For a windstorm example, the Texas Windstorm Insurance Association shows an average annual residential premium starting at $1,700. Add the $1,600 average yearly homeowners premium to arrive at $4,100 as an average hurricane insurance program cost. Of course, the rates for each Hurricane Insurance Program will vary depending on location, insurance carrier, the coverage amounts of the various policies, and the level of deductible the insured chooses.
Best Hurricane Insurance Programs
That goal is the reason for developing the Program Business Market Directory. We connect wholesalers, MGAs/MGUs, program administrators, and carriers with independent agents looking to place business. The robust platform enables agents to contact and begin the underwriting, quote, and submission process.
A keyword search for "flood" insurance yields results, including Amwins Underwriting. Some details for its Flood Flex program are in this post. In addition, it offers clients innovative commercial property insurance solutions for out-of-pocket expenses that insureds face after their business suffers through a flood.