Consumers should review their policies and compare home insurance quotes in order to avoid unexpectedly high deductibles in the event of a hurricane. Hurricane Irene, which wreaked a path of havoc along the east coast in late August, caused millions of dollars in damages to personal property and prompted thousands of homeowners to file claims with their insurance companies. However, many homeowners were in for an unpleasant surprise: in many cases, home insurance coverage only covered the costs of repairs and replacement after an unusually high deductible had been paid. Instead of the usual $500 to $1000 deductible, homeowners faced percentages of the insured value of their home—in some cases, up to 10 percent!
The reason a hurricane deductible can be a percentage of the insured value of a property is that after Hurricane Hugo in 1989 and Hurricane Andrew in 1992, the insurance companies requested legislation to this effect in order to reduce their losses in coastal regions. However, especially in regions where hurricanes and tropical storms are rare occurrences, most homeowners were not aware of this term and now face unexpectedly high costs to repair their homes.
Differences in Home Insurance Coverage
Not every insurance company utilizes a percentage as a hurricane deductible. Some still have a flat rate, like the procedure with most other claims. Homeowners shopping for policies are best advised to compare home insurance and pay special attention to the terms and conditions of filing claims. In addition, it’s important to understand that insurance companies are legally obliged to inform their customers of the specifics of their hurricane deductibles each year, so consumers are advised to take the time to read the fine print when their insurers send them their annual binders.
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