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Knowledge Center Items Picking Up the Pieces: Personal Insurance in the Wake of a Hurricane

Picking Up the Pieces: Personal Insurance in the Wake of a Hurricane

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Taking steps before and after a hurricane is critical in effective disaster preparedness, yet as we have seen time and again, the resulting destruction in the path of a storm is brutal.

In 2005, Hurricane Katrina caused an estimated $161 billion in property damage, according to the National Oceanic and Atmospheric Administration (NOAA), making it the costliest storm on record. Hurricane Harvey in 2017 caused $125 billion in damage.

High winds are the principal cause of hurricane-inflicted loss of life and property damage. In addition, flooding resulting from a coastal storm surge of the ocean can level a home. Having the right personal insurance policies in place will help homeowners get back on their feet and rebuild their homes.

Jay Pellegrini, RPS Area President/Covington, Louisiana, reviews the coverages insureds should be carrying and how each is triggered in the aftermath of a hurricane.

Wind-Driven Damage

“A homeowners and/or dwelling policy will respond in the event of hurricane damage if the policy includes wind coverage,” notes Pellegrini.

“Should wind exposure be excluded from a policy, an insured is able to purchase coverage through the state. Louisiana, the Carolinas, Florida, and Texas, for example, all have state-run wind insurance plans. In these coastal areas, the exposure for wind is so high that private insurers are unable to handle the risk involved so the state steps in to underwrite the exposure.”

Flood Damage

Along with having wind coverage under a homeowners/dwelling policy or separately through the state, carrying flood insurance is also critical. In general, flood damage is not covered under homeowners insurance if the damage is the result of rising water and not rain or wind-driven rain.

“If, for instance, a hurricane damages the roof of a house and rain comes in, causing water damage to the furniture, a homeowners policy would step in – as long as the roof is covered as well,” explains Pellegrini. “However, if there is a storm surge or rising river water or even rising street water that causes damage to the house, this would not be covered under a homeowners policy and [the situation] requires flood insurance.”

A claims adjuster would determine the cause of the property damage to the home and which policy is triggered and for how much. The language in most policies is clear as to what is and isn’t covered.

“It’s best to carry coverage for both wind and flood damage,” continues Pellegrini. “It’s important for agents to offer the appropriate policies to cover both perils. Be sure to have documentation offering flood insurance to all insureds.” 

A recent survey conducted by ValuePenguin revealed that across the 100 largest U.S. cities, there are only four active flood insurance policies for every 10 houses located in high-risk flood zones.

RPS provides both homeowners and flood insurance policies to clients through our agency partners including those located in coastal areas.

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