Here's why homeowners should check their insurance even if Hurricane Laura misses them

Downed power lines are seen on Highway 90 after Hurricane Laura passed through Iowa, Louisiana, August 27, 2020.

Elijah Nouvelage | Reuters

As communities along the Gulf Coast assess the damage left in Hurricane Laura's wake, homeowners elsewhere may want to double-check their own insurance coverage.

The massive storm made landfall early Thursday in Louisiana near the Texas border as a Category 4 hurricane, packing sustained winds of about 150 mph and causing a dangerous storm surge. While Laura has weakened as it continues moving northward, it's a good reminder that hurricane season is far from over.

The season runs from June 1 to Nov. 30, although the peak is mid-August to late October. And while many perils are covered under the standard part of your homeowners policy, some weather-related events qualify for coverage differently — and some may not be covered at all.

"Having homeowners insurance is great, but the important thing is understanding what it does for you," said Fabio Faschi, an expert on such insurance for online marketplace Policygenius.

How hurricanes are covered

If you live in a state along the East Coast or Gulf of Mexico, there's a good chance your homeowners policy has a hurricane deductible. Likewise, in states more prone to wind-related events — i.e., tornadoes — you're likely to have a wind/hail deductible. You also could have both.

Typically, those amounts range from about 1% to 5% (with a minimum $500) depending on the specifics of your insurance contract. Some homeowners might opt for an even higher deductible if it's available. Generally speaking, the higher the deductible, the lower the premiums, and vice versa. 

It's important to note that for those percentage-based deductibles, the amount is based on your insured value, not the damage caused.

Five costliest U.S. hurricanes on record

Storm	Year	Category	Adjusted cost
Katrina	2005	3	$170.0B
Harvey	2017	4	$131.3B
Maria	2017	4	$94.5B
Sandy	2012	1	$74.1B
Irma	2017	4	$52.5B

So if your home is insured for $200,000 and you have a 2% hurricane deductible, you'd be responsible for covering the first $4,000, regardless of the total cost of the damage. At a 5% deductible, that amount would be $10,000.

This means it's wise to have a plan to cover your share in the aftermath of a disaster.

It's also important to make sure the amount of insurance you have on your home is based on the replacement cost, not the market value, Faschi said.

"You might buy a property for $1 million but it may not cost $1 million to replace," he said. 

The opposite could happen as well: The replacement cost could be more than the market value.

Coverage for floods

Homeowners policies generally exclude flooding from coverage — something more than half (53%) of homeowners don't know, according to a Policygenius survey.

Yet just 1 inch of water in your home can cause up to $25,000 worth of damage, according to the Federal Emergency Management Agency. And, one in four flood insurance claims come from outside a high-risk zone.

For coverage in most situations, you'd need separate flood insurance through either the federal National Flood Insurance Program or a private insurer. 

Be aware, however, that there are coverage exclusions and limitations. And, flood policies take 30 days to become effective. The average yearly cost is $700, although that can vary widely.

"If you're in an area that doesn't see a lot of flood activity, it'll cost you less," Faschi said. "But if you live right on the coast, it'll cost you more."

You can check your flood risk at realtor.com, which has started including that information alongside other details about properties.

Odds and ends

Before a storm hits, it's worthwhile taking photos as a way to document the condition of your house and your belongings.

"That can go a long way toward documenting your claim," Faschi said. "It takes a lot of the guesswork out of it for the claims adjustor."

The idea is to have proof of what you own, along with a record of what kind of shape everything was in before the storm. If you can't prove the prior condition of, say, your now-missing side door, it could cause snags or denials in the claims process if the insurance company has reason to question whether it was maintained properly.

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Additionally, important documents, such as tax returns and birth certificates, should be stored somewhere safe in a waterproof container. Duplicates should either be kept with a trusted person elsewhere or stored electronically (i.e., on a flash drive or online cloud storage).

You also should have an emergency plan in place in case a disaster forces you out of your home, experts say. While this may be trickier to pin down during the pandemic, keep in mind that a storm-damaged house could be unlivable until repaired.

Be aware that if you do sustain property damage and your home is in a federally declared disaster area, the loss might qualify as a tax deduction.

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