Insurance coverage tips for extreme weather

The frequency and cost of severe weather events in the U.S. are both increasing. In 2023, the country set a record for the number of weather or climate disasters that cost more than $1 billion. The U.S. experienced 28 of these events in 2023.

Now, when disaster strikes, some homeowners are discovering that their insurance providers do not cover all of their costs.

Mark Friedlander, director of corporate communications at the Insurance Information Institute, spoke with Scripps News about the expenses associated with climate and weather-related insurance and what consumers should be aware of.

“There is a crucial aspect of home insurance policies known as your dwelling coverage, identified as ‘Coverage A’ on your declarations page. This is your replacement-cost coverage,” Friedlander explained. “If you have not updated this recently, there is a high probability that you will face a shortfall in the event of a loss. An analysis conducted showed that replacement costs have increased by 55% from 2019 to 2022 due to rising construction material costs and labor shortages, which is almost four times the consumer price index. It is essential to have adequate replacement-cost coverage in your policy to ensure protection from hazards like those discussed here today.”

Do you need a deductible specifically for a hurricane?

“It is important to fully comprehend the contents of your policy. If you reside in a hurricane-prone state, you will likely have a standard deductible for all types of damage and a separate deductible for wind storms originating from named tropical systems,” Friedlander advised. “Ensure that you have the appropriate levels of coverage, understand what is covered and what is not, and we recommend conducting an insurance checkup at least annually. Now is an ideal time with hurricane season commencing this weekend. Reach out to your agent, review your policy quickly, identify any gaps, and one of the significant gaps is flood insurance. Many homeowners are unaware that their standard home policy does not include flood coverage. This is a separate coverage provided by either the National Flood Insurance Program or a private flood insurer.”

If you have or require special coverage, understand when it becomes effective

“Most standard policies cover wind storms. However, in hurricane-prone states and tornado-prone states, you will typically have a separate deductible for wind or wind and hail based on the region,” Friedlander stated. “It is crucial to understand when this separate deductible is triggered, as detailed in your policy document. If you are unclear about its operation, contact your insurance agent. They are your best resource to explain it to you. In all likelihood, you will be covered for all types of damage from wind events, but you should grasp what triggers this special deductible and what falls under the standard deductible.”