Tips for navigating insurance coverage for extreme weather

When disaster strikes, some homeowners are finding their insurance providers aren't covering all of their costs.
Houston storms
Posted at 7:13 PM, May 29, 2024

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

Now, when disaster strikes, some homeowners are finding their insurance providers aren't covering all of their costs.

Mark Friedlander, director of corporate communications with the Insurance Information Institute, spoke with Scripps News about the costs of climate and weather-related insurance and what consumers should look out for.

"There's a critical component of home insurance policies called your dwelling coverage, listed as 'Coverage A' on your declarations page. That's your replacement-cost coverage," Friedlander said. "And if you have not updated that recently, there's a good chance you're going to have a shortfall if you suffer a loss. The institution did analysis of data from 2019 to 2022 that showed replacement cost up 55% over those four years due to escalating cost of construction materials and labor shortages. That's nearly four times the consumer price index. You need to have adequate replacement-cost coverage in your policy to make sure you are protected from hazards like what talking about here today."

Do you need a deductible specifically for a hurricane?

"You need to clearly understand what's in your policy. If you live in a hurricane-prone state you typically will have a standard deductible for all types of damage, but a separate deductible for wind storms that are from named tropical systems," Friedlander said. "And you just need to make sure you have right levels of coverage. What is covered, what is uncovered, and we always recommend doing an insurance checkup at least once a year. Now is the ideal time with hurricane season starting this weekend. Call your agent, quickly walk through your policy, identify any gaps. And one of the biggest gaps, actually, is flood insurance. Many homeowners don't realize their standard home policy does not cover floods. That's a separate coverage through either 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 cover wind storms. However, in hurricane-prone states and tornado-prone states you typically will have a separate deductible for wind or wind and hail depending on the area," Friedlander said. "You just need to understand when that separate deductible is triggered. It will be explained in your policy document. And if you're not clear how it works, call your insurance agent. They're your best advocate to explain it to you. Most likely you will be covered for all types of damage from wind events. But you just need to understand what triggers this special deductible and what's under the standard deductible."

A map of billion-dollar disasters in the U.S. in 2023


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