Home owner’s insurance and how to handle claims.

Scorching, unrelenting heat. Humidity is so dense and suffocating, you can barely breathe. The incessant stridulation of crickets can be heard well into the evening. The rapid appearance of an angry thunderstorm at any given time that dissipates as quickly as it showed up. Otherwise known as August in Florida. Most Floridians are well aware this means hurricane season. The official hurricane season runs from June to November, peaking in September. Residents with waterfront properties and investments are particularly at risk given the amount of damage hurricanes pose.

Most people know that the destructive forces behind a hurricane are the wind and floods. The Saffir-Simpson Hurricane Wind Scale categorizes hurricanes on a 1 to 5 rating based on a hurricane’s maximum sustained wind speed. Knowing what steps you need to take to prepare and protect your home and family will allow you to sleep a little easier when the panic hits. Below, we will explore some of the basics of home insurance, hurricane, wind, and flood deductibles. Finally, how to file an insurance claim and what you can expect.

Understanding the basics of a home insurance policy

A standard home insurance policy will generally cover the damage to a home’s interior (your personal belongings) and exterior (the structure of your home). It will also cover the loss or theft of possessions, and lastly, personal liability for harm to others sustained on your property. There are three basic levels of coverage:

  • Actual cash value (ACV) is equal to the replacement cost minus depreciation. It represents the dollar amount you would get if you sold it.
  • Replacement cost is the amount you would receive to replace an item, or in this case, your property, to the condition it was in before the damage.
  • Extended replacement cost will cover the cost of repairing or rebuilding your home to its condition before the damage, even if the loss amount is above your dwelling coverage policy limits. You can select anywhere between 20% to 50%.

In addition to the levels of coverage, there are also eight types of home insurance to choose. They provide different levels of coverage based on the type of property.

  • HO-1: Basic Form
  • HO-2: Broad Form
  • HO-3: Special Form
  • HO-4: Tenant’s Form
  • HO-5: Comprehensive Form
  • HO-6: Condo Form
  • HO-7: Mobile Home Form
  • HO-8: Older Home Form

The HO-1 is the most limited in terms of coverage and protects your home and belongings from the following named perils:

  • Fire and smoke (including wildfires)
  • Explosions
  • Lightning
  • Vandalism
  • Theft
  • Damage from vehicles
  • Damage from aircrafts
  • Damage from riots
  • Volcanic eruptions

The HO-2 policy is essentially an upgrade to the HO-1 policy and will cover your home and belongings against six additional perils:

  • Falling objects
  • Excess weight due to snow, ice, or sleet
  • Freezing of household amenities (i.e., AC/Heating system)
  • Sudden and accidental breaking, cracking, bursting of pipes and other household systems
  • Damage due to the sudden and unexpected discharge of water or steam
  • Sudden and accidental damage due to an electrical surge

The HO-3 policy is the most common and provides “all-risks” coverage for the aforementioned perils, with the exception of:

  • Earthquakes, landslides, and mudslides
  • Floods
  • Water damage
  • Mold and fungus
  • Damage due to infestation of animals and or insects
  • Negligence and general wear and tear
  • Settling, cracking, or warping of your house’s foundation
  • Damage caused by pets
  • War or government actions
  • Smog and corrosion

Determining the cost of home insurance

Several factors determine the cost of home insurance:

  • The cost to rebuild your home
  • The materials that make up your home, such as wood, stucco, brick, and stone
  • The age of your home
  • Your area’s fire rating (how close you are to a water source and a fire department)
  • The claims history in your area, such as tornados and crime rates
  • Your personal claims history
  • Your pets (certain dog breeds may be prohibited)
  • The coverage and policy limits you select

To file or not to file. That is the question.

When deciding whether or not to file a claim, the first rule of thumb is that if the amount of damage is less than your deductible, don’t file. Even if the amount is a few hundred dollars more than your deductible, it still may not be worth filing. It’s best to get a reputable estimate for the cost of the repairs. Then once you have an idea of how much repairing your home will cost, you can decide if it’s worth filing a claim.

Will filing a claim help me in the long run?

The question of whether filing a claim is beneficial or not depends on your circumstances. Your insurance company can raise your rates if you file multiple claims. It’s best to consider all things before you decide to file a claim. Most insurance companies won’t penalize you for filing one claim. But if they do, you can always shop around for more customer-friendly companies. The general timeframe for filing is:

  • Within 14 days after you file a claim, you have the right to receive an acknowledgment from your insurance company.
  • Within 30 days after you file a Proof of Loss form with your insurance company, you have the right to be notified of your claim’s status (fully covered, partially covered, denied, or being investigated).
  • Within 90 days, you have the right to receive a full settlement, payment of the undisputed portion, or denial of your claim.

Hurricane Deductibles vs Hurricane Insurance

Hurricane “Insurance” is a misnomer. There isn’t actually “hurricane insurance.” You have your regular home insurance and a hurricane deductible. A trigger is an event that puts a hurricane deductible into effect. Certain states have different rules for defining triggers. In Florida, it’s when the National Weather Service (NWS) declares a storm to be a hurricane. Tropical storms do not trigger hurricane deductibles. Additionally, “hurricane deductibles apply for damage that occurs from the time a hurricane watch or warning is issued for any part of Florida, up to 72 hours after such a watch or warning ends and anytime hurricane conditions exist throughout the state.”

Florida has an annual hurricane deductible. Therefore if your home becomes damaged in multiple storms during a season, you won’t incur a deductible for each storm.

Hurricane deductibles do not cover:

  • Wind damage
  • Flooding
  • Mudslides
  • Power Failures

Windstorm insurance explained

Windstorm insurance is also known as wind/hail deductibles. It works the same way a hurricane deductible works. Windstorm insurance covers all exterior parts of a home and can include detached structures like garages and sheds. Getting windstorm insurance usually takes about 15 days.

Coverage includes:

  • Blown off shingles
  • Downed trees
  • Shattered windows
  • Rain entering your home as a result of wind damage

Windstorm insurance will not cover:

  • A storm surge
  • Pooling of water due to heavy rain
  • Water from a swollen creek, river, or lake

Flood insurance explained

A typical flood policy covers direct physical losses by a flood. If a hurricane causes flooding, your home insurance most likely will not cover it. Flood insurance takes about 30 days to process.

Flood insurance generally covers the following: 

  • The main structure of the home
  • Electrical systems
  • Appliances
  • Other building property

Flood insurance doesn’t cover the following:

  • Damage from moisture
  • Mildew or mold that the homeowner could have prevented
  • Money and/or valuable papers
  • Belongings or assets outside a home (e.g., trees, plants, walkways, decks, fences, and swimming pools)
  • Temporary housing

Filing a home insurance claim. The process explained.

Filing a hurricane insurance claim is no different than any other insurance claim. The most important thing is to do it immediately. But before you do, be sure to:

  • Document the damage with photos and/or video
  • Prevent any further damage (e.g., cover any broken windows)
  • Keep track of your communication with the insurance company. Be sure to document dates, contacts’ names, any conversations, and any pertinent information.
  • Don’t make any permanent repairs until the insurer reviews the damage.
  • Get several repair estimates from qualified contractors in writing.

The timeframe for when you can expect payment for your claim varies. Depending on the amount of damages, the cost of repairs, and how thorough and efficient you are with your documentation, it can take weeks, months, or in some cases, years before you receive compensation. The best course of action is to constantly communicate with your insurer throughout the entire claims process.

If your home insurance claim is denied, you can file an appeal. Your insurer will provide you with information and instructions on the appeals process. If your appeal is denied and you feel your case was mishandled, you can choose to file a complaint with the State Department of Insurance.

Final thoughts on home insurance and disaster preparedness

No one can predict when a hurricane will strike. Nor if it will do any damage to your home. The best course of action is to know what your home insurance and hurricane deductible does and does not cover ahead of time. One of the biggest mistakes you can make is assuming you’re covered. Be sure you review your policies every year. Having an evacuation route, keeping all your important documents safe, and just general preparedness will alleviate a lot of stress for you and your family.