Insurance tips for extreme weather

The frequency and cost of severe weather events in the U.S. are on the rise. In 2023, the country broke a record for the number of weather or climate disasters that exceeded $1 billion in costs, with a total of 28 such events.

Unfortunately, some homeowners are discovering that their insurance policies do not cover all their expenses when a disaster strikes.

Mark Friedlander, the director of corporate communications at the Insurance Information Institute, discussed the rising costs of climate and weather-related insurance with Scripps News, emphasizing the importance of understanding your insurance coverage.

“A critical component of home insurance policies is your dwelling coverage, known as ‘Coverage A’ on your declarations page. This is your replacement-cost coverage,” Friedlander explained. “If you haven’t updated this recently, you may face a shortfall in the event of a loss. Our analysis from 2019 to 2022 showed a 55% increase in replacement cost due to rising construction material costs and labor shortages. This is nearly four times the consumer price index. It is essential to have adequate replacement-cost coverage in your policy to protect yourself from potential hazards.”

Do you need a deductible specifically for a hurricane?

“It’s crucial to fully understand the details of your policy. If you reside in a hurricane-prone state, you likely have a standard deductible for all types of damage and a separate deductible for wind storms caused by named tropical systems,” Friedlander advised. “Ensure you have the appropriate levels of coverage, know what is covered and what is not, and conduct an insurance checkup annually. Many homeowners are unaware that standard home policies do not cover floods, which require separate coverage through the National Flood Insurance Program or a private flood insurer.”

If you have or need special coverage, understand when it comes into effect

“Most standard policies include coverage for wind storms. However, in hurricane-prone and tornado-prone states, you may have a separate deductible for wind or wind and hail, depending on the region,” Friedlander elaborated. “Understand when this separate deductible applies, as detailed in your policy document. If you’re unsure, contact your insurance agent for clarification. It’s important to grasp the triggers for special deductibles and what falls under the standard deductible.”