If you’re thanking your lucky stars that Tropical Storm Gordon isn’t heading for your neighborhood, it’s probably time to review your insurance coverage.
The quickly moving weather system is expected to make landfall on the Gulf Coast as a Category 1 hurricane Tuesday night, bringing strong wind and up to a foot of rain in some places.
While it’s too late for homeowners in its path to make insurance changes, people in other hurricane-prone areas could take it as a reminder that the next big storm could be headed their way.
The Atlantic hurricane season runs from June 1 to Nov. 30, although the peak season is mid-August to late October. Last year, that included Hurricanes Harvey, Irma and Maria, three monsters that hit during that time frame. Combined, they caused $265 billion in damage, according to the National Oceanic and Atmospheric Administration.
It’s a risk not to have sufficient coverage if you live in an area prone to storms. As many past hurricane victims know, it only takes one major weather event to seriously damage — or destroy — your home.
“Most people fail to read their [homeowners] insurance contract to understand what’s covered and what’s not, and then they’re surprised after an event when they discover they didn’t have the coverage,” said Lynne McChristian, a consultant to the Insurance Information Institute.
It’s also important not to wait until a storm is on the horizon. Depending on the type of insurance, there could be a lag between when you first decide to get it and when it takes effect. And once a storm has been named, forget about it.
Here are tips for making sure you’re prepared if the next big storm heads your way.
Check your hurricane deductible
There’s a good chance your homeowners insurance policy has a hurricane deductible. It typically ranges from about 1 percent to 5 percent, depending on the specifics of your insurance contract. Some homeowners might opt for an even higher deductible if it’s available.
It’s important to note that the percentage is based on your insured value, not the damage caused. So if your home is insured for $200,000 and you have a 2 percent hurricane deductible, you’ll pay $4,000 even if the damage is only, say, $10,000.
This means you need a plan to cover your share in the aftermath of a disaster.
“People should never take a higher deductible than they can afford,” McChristian said.
Prepare for flooding
While many homeowners policies cover wind damage, they generally exclude flood damage. Yet floods are often what cause the most destruction.
“Most people who live in areas where hurricanes are a threat are also at risk of flooding,” McChristian said.
For coverage, you’ll need flood insurance through the federal National Flood Insurance Program or a private insurer. Be aware, however, that there are coverage exclusions and limitations.
For example, a government flood policy won’t cover all of your belongings in your basement outside of things such as washers and dryers and water heaters. Separate insurance would be required.
If you think you need a flood policy, don’t wait. It will take 30 days to take effect.
Renters are vulnerable, too
Even if you don’t own your home, your finances are still at risk if a storm barrels through and damages your residence.
“People underestimate the value of their [belongings] when they rent,” McChristian said. “You can easily have tens of thousands of dollars’ worth of contents in your home.”
Renter’s insurance is an option for covering your belongings. It also can cover the cost of having to live somewhere else if you cannot remain in your home after a storm.