Courtesy of iii.org

Hurricane season takes place June 1 – November 30 every year. Don’t wait until after you have a loss to check your insurance—review your homeowners or renters policies to make you have the right coverage in the event you’re hit with a destructive storm.

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Make sure your home’s structure has adequate coverage

Standard homeowners insurance covers the structure of your house for disasters such as hurricanes and windstorms, along with a host of other disasters. It’s important to understand the elements that might affect your insurance payout after a hurricane, and adjust your policies accordingly.

• Check your homeowners policy limit and make sure the amount is enough to rebuild your home – The cost of rebuilding or extensively repairing a home is dependent on a number of factors—and, remember that the real estate value of a house is notthe same as the cost to rebuild. Therefore, it pays to understand in detail what it will cost to rebuild in the event your house is severely damaged or destroyed and make sure your insurance will cover that amount.

• Understand your hurricane/windstorm deductible – Insurers in every coastal state from Maine to Texas include separate deductibles for hurricanes and/or windstorms in their homeowners policies, stated on the Declarations (front) page of your homeowners policy.

A hurricane deductible is applied only to hurricanes, whereas a windstorm deductible applies to any type of wind. If your policy has a hurricane deductible, it will clearly state the specific “trigger” that would cause the deductible to go into effect.

Unlike the standard “dollar deductible” on a homeowners policy, a hurricane or windstorm deductible is usually expressed as a percentage, generally from 1 to 5 percent of the insured value of the structure of your home.

If you live in an area at high risk for hurricanes, your hurricane deductible may be a higher percentage. Depending on your insurer and the state where you live, you may have the option of paying more money in premiums in exchange for a lower deductible.

Like any deductible, a hurricane or windstorm deductible will affect the bottom line of your insurance payout. If you have a high hurricane or windstorm deductible consider putting aside the additional money you may need to rebuild your home.

• Understand what disasters your insurance policy covers—and those it doesn’t – Standard homeowners insurance policies provide coverage for hurricanes, wind, theft, fire, explosion, lightning strikes and many other disasters. However, all policies also list exclusions, which are events NOT covered by the policy.

One common exclusion is flooding. People tend to underestimate this risk, but 90 percent of all natural disasters—especially hurricanes—include some form of flooding. If you live in a flood zone or a hurricane-prone area, a separate flood insurance policy is a must.

Another common exclusion is sewer backups (which is also not covered by flood insurance) Sewer backup insurance is also good to have in hurricane-prone areas.

Get to know all of the exclusions in your policy and either talk to your insurance professional about purchasing separate coverage, or be prepared to pay out of pocket for the damages that are excluded in your policy.

• If you own a co-op apartment or condo – check with your management company and the bylaws to understand what is covered under the building’s master insurance policy versus what damages you need to cover in your own co-op or condo owners insurance policy.

Make sure your possessions are adequately insured

Imagine the cost of repurchasing all of your furniture, clothing and other personal possessions. Whether you have homeowners insurance or renters insurance, your policy provides protection against loss or damage due to a hurricane.

• Determine the value of your possessions with a home inventory – Creating a full inventory of your belongings and their value will make it easy to see if you are sufficiently insured for either replacement cost or cash value of the items. It will also help speed the insurance claims process and help provide proof of losses for tax or disaster aid purposes.

• Review your policy to ensure you’re adequately covered – Homeowners policies provide approximately 50 to 70 percent of the amount of insurance you have on the structure of your home. If you rent, know that your landlord’s insurance will only cover the structure of your home—you need a renters policy to protect your possessions against loss or damage.

Make sure your policy provides enough coverage for additional living expenses

Additional living expenses (ALE) covers the extra costs incurred if you need to live elsewhere because your home is rendered uninhabitable as the result of a hurricane (or any other insured disaster). While your home or apartment is being repaired or rebuilt, ALE covers hotel bills, restaurant meals, etc.—expenses over and above what your customary living expenses would be at home. Generally, the ALE policy limit is 20 percent of the amount of insurance coverage on the structure of your home. Standard renters policies also provide for ALE.

• Most insurers offer the option of higher coverage limits – Depending on where you live (which may dictate your expenses), you may want to consider a higher ALE.

• ALE reimbursements may be limited to a specified amount of time – Make sure you’re comfortable with the time limits in your policy.

• If you rent out part of your home, ALE coverage also reimburses you for lost rental income. Make sure your policy reflects the current amount of your rental income.

Courtesy of iii.org

Wind-caused property damage is covered under standard homeowners, renters and business insurance policies. Renters’ insurance covers a renter’s possessions; the landlord insures the structure.

Property damage to a home, a renter’s possessions, and a business—resulting from a flood—is generally covered under FEMA’s National Flood Insurance Program (NFIP) and through some private insurers.

Private-passenger vehicles damaged or destroyed by either wind or flooding are covered under the optional comprehensive portion of an auto insurance policy. Nearly 80 percent of U.S. drivers choose to purchase comprehensive coverage.

“Superstorm Sandy, which impacted the Northeast, including New Jersey and Long Island, was the deadliest and most destructive storm of the 2012 Atlantic hurricane season, causing billions of dollars in insured losses,” said Dr. Michel Leonard, CBE, Vice President and Senior Economist, Triple-I, who also gathered the content posted at the Triple-I’s Resilience Accelerator website. “Homeowners and business owners should use flood maps to better understand their current exposure which can help determine whether their insurance is adequate.”

Most people who live in flood-prone areas of the country lack flood insurance. The average take-up rate for flood insurance—meaning the percentage of property owners who purchase these policies—stood at 15 percent nationwide, a Triple-I survey found in 2018.  In Ocean County, NJ, for example, the take-up rate in 2018 was 17.8 percent, compared to Suffolk County, Long Island, where only 6.2 percent of properties have flood insurance coverage.

Tropical Storm Fay is the sixth named storm of 2020, marking the first time six tropical cyclones have formed in the Atlantic basin so early in the calendar year.  Dr. Phil Klotzbach, a Triple-I non-resident scholar, and his atmospheric science team at Colorado State University, released an updated forecast last month which called for “well above-average” tropical cyclone activity for the balance of 2020.

Courtesy of iii.org

Wind-caused property damage is covered under standard homeowners, renters and business insurance policies. Renters’ insurance covers a renter’s possessions; the landlord insures the structure.

Property damage to a home, a renter’s possessions, and a business—resulting from a flood—is generally covered under FEMA’s National Flood Insurance Program (NFIP) and through some private insurers.

Private-passenger vehicles damaged or destroyed by either wind or flooding are covered under the optional comprehensive portion of an auto insurance policy. Nearly 80 percent of U.S. drivers choose to purchase comprehensive coverage.

“Superstorm Sandy, which impacted the Northeast, including New Jersey and Long Island, was the deadliest and most destructive storm of the 2012 Atlantic hurricane season, causing billions of dollars in insured losses,” said Dr. Michel Leonard, CBE, Vice President and Senior Economist, Triple-I, who also gathered the content posted at the Triple-I’s Resilience Accelerator website. “Homeowners and business owners should use flood maps to better understand their current exposure which can help determine whether their insurance is adequate.”

Most people who live in flood-prone areas of the country lack flood insurance. The average take-up rate for flood insurance—meaning the percentage of property owners who purchase these policies—stood at 15 percent nationwide, a Triple-I survey found in 2018.  In Ocean County, NJ, for example, the take-up rate in 2018 was 17.8 percent, compared to Suffolk County, Long Island, where only 6.2 percent of properties have flood insurance coverage.

Tropical Storm Fay is the sixth named storm of 2020, marking the first time six tropical cyclones have formed in the Atlantic basin so early in the calendar year.  Dr. Phil Klotzbach, a Triple-I non-resident scholar, and his atmospheric science team at Colorado State University, released an updated forecast last month which called for “well above-average” tropical cyclone activity for the balance of 2020.

Courtesy of iii.org

Hurricanes and storm-related flooding are responsible for the bulk of damage from disasters in the United States, accounting for annual economic losses of about $54 billion, according to the Congressional Budget Office (CBO).

These losses have been on the rise, due, in large part, to increased coastal development. More, bigger homes, more valuables inside them, more cars and infrastructure – these all can contribute to bigger losses. The CBO estimates that a combination of private insurance for wind damage, federal flood insurance, and federal disaster assistance would cover about 50 percent of losses to the residential sector and 40 percent of  commercial sector losses.

Recent research illustrates the benefits provided by mangroves, barrier islands, and coral reefs – natural features that frequently fall victim to development – in terms of limiting storm damage. In many places, mangroves are the first line of defense, their aerial roots helping to reduce erosion and dissipate storm surge. A healthy coral reef can reduce up to 97 percent of a wave’s energy before it hits the shore. Reefs — especially those that have been weakened by pollution, disease, overfishing, and ocean acidification — can be damaged by severe storms, reducing the protection they offer for coastal communities.

In Florida, a recent study found, mangroves alone prevented $1.5 billion in direct flood damages and protected over half a million people during Hurricane Irma in 2017, reducing damages by nearly 25% in counties with mangroves. Another study found that mangroves actively prevent more than $65 billion in property damage and protect over 15 million people every year worldwide.

A separate study quantified the global flood-prevention benefits of coral reefs at $4.3 billion.

Such estimates invite debate, but even if these endangered systems provided a fraction of the loss prevention estimated, wouldn’t you think coastal communities and the insurance industry would be investing in protecting them?

Well, they’re beginning to.

The Mexican state of Quintana Roo has partnered with hotel owners, the Nature Conservancy, and the National Parks Commission to pilot a conservation strategy that involves coral reef insurance. The insurance component – a one-year parametric policy – pays out if wind speeds in excess of 100 knots hit a predefined area. Unlike traditional insurance, which pays for damage if it occurs, parametric insurance pays claims when specific conditions are met – regardless of whether damage is incurred. Without the need for claims adjustment, policyholders quickly get their benefit and can begin their recovery. In the case of the coral reef coverage, the swift payout will allow for quick damage assessments, debris removal, and initial repairs to be carried out.

Similar approaches could be applied to protecting mangroves, commercial fish stocks that can be harmed by overfishing or habitat loss, or other intrinsically valuable assets that are hard to insure with traditional approaches.

Courtesy of iii.org

Hurricanes and storm-related flooding are responsible for the bulk of damage from disasters in the United States, accounting for annual economic losses of about $54 billion, according to the Congressional Budget Office (CBO).

These losses have been on the rise, due, in large part, to increased coastal development. More, bigger homes, more valuables inside them, more cars and infrastructure – these all can contribute to bigger losses. The CBO estimates that a combination of private insurance for wind damage, federal flood insurance, and federal disaster assistance would cover about 50 percent of losses to the residential sector and 40 percent of  commercial sector losses.

Recent research illustrates the benefits provided by mangroves, barrier islands, and coral reefs – natural features that frequently fall victim to development – in terms of limiting storm damage. In many places, mangroves are the first line of defense, their aerial roots helping to reduce erosion and dissipate storm surge. A healthy coral reef can reduce up to 97 percent of a wave’s energy before it hits the shore. Reefs — especially those that have been weakened by pollution, disease, overfishing, and ocean acidification — can be damaged by severe storms, reducing the protection they offer for coastal communities.

In Florida, a recent study found, mangroves alone prevented $1.5 billion in direct flood damages and protected over half a million people during Hurricane Irma in 2017, reducing damages by nearly 25% in counties with mangroves. Another study found that mangroves actively prevent more than $65 billion in property damage and protect over 15 million people every year worldwide.

A separate study quantified the global flood-prevention benefits of coral reefs at $4.3 billion.

Such estimates invite debate, but even if these endangered systems provided a fraction of the loss prevention estimated, wouldn’t you think coastal communities and the insurance industry would be investing in protecting them?

Well, they’re beginning to.

The Mexican state of Quintana Roo has partnered with hotel owners, the Nature Conservancy, and the National Parks Commission to pilot a conservation strategy that involves coral reef insurance. The insurance component – a one-year parametric policy – pays out if wind speeds in excess of 100 knots hit a predefined area. Unlike traditional insurance, which pays for damage if it occurs, parametric insurance pays claims when specific conditions are met – regardless of whether damage is incurred. Without the need for claims adjustment, policyholders quickly get their benefit and can begin their recovery. In the case of the coral reef coverage, the swift payout will allow for quick damage assessments, debris removal, and initial repairs to be carried out.

Similar approaches could be applied to protecting mangroves, commercial fish stocks that can be harmed by overfishing or habitat loss, or other intrinsically valuable assets that are hard to insure with traditional approaches.