Hampton Roads is Hit by a Monster Twister
Last week, Virginia Beach and Chesapeake were struck by a devastating tornado. While the twister struck on April 1, it was no joke. Dozens of homes were damaged and Real Life Church was destroyed. The tornado touchdown was a reminder that the mid-west is not the only region to be affected by twister treachery. Fortunately, houses and property can be restored; that’s when we in the insurance industry step in and deliver on the promises we have made to our clients. It’s the most rewarding aspect of our profession to make sure our clients are taken care of.
People, on the other hand, cannot be restored. Miraculously, nobody was injured or killed. We can be thankful that the result was no worse than it was.
The storm did blow open an interesting issue regarding homeowners coverage in our area, and one that we do not often discuss. Over the past couple of decades, the insurance industry has attempted to mitigate potential losses in coastal markets resulting from windstorm. Most homeowners policies in Hampton Roads have EITHER a wind/hail deductible or a named storm/tropical cyclone deductible. As a homeowner, it is important to understand what you have, what the differences are, and what you can do to reduce the amount you pay after a loss.
Tropical Cyclone/Named Storm/Hurricane Deductible
If you have a deductible that is called a tropical cyclone, named storm, or hurricane deductible, you must read your policy to understand how to calculate your deductible is and when it applies. Typically, this type of deductible is calculated as a percentage of your building amount. So, if you have a 2% tropical cyclone deductible and a $300,000 dwelling amount, then your tropical cyclone deductible is $6,000. (To be clear, the percentage is NOT a percentage of the loss like a health insurance co-pay; it’s calculated as a percentage of the dwelling amount.)
The definition of when the higher deductible applies will be in your policy and can vary by company. The deductible could apply when there is any loss (even non-wind such as a fire loss) during or following a tropical storm warning in your state, or a neighboring state. Or, the trigger could be a wind loss during a tropical storm. You may simply read the language in your policy to determine when the deductible applies. Alternatively, your agent should be able to explain it to you.
Some insurance companies opt to simplify and broaden the application of a higher deductible in order to reduce claims payouts and eliminate confusion. A wind and hail deductible, also most often expressed as a percentage, is calculated the same way as a hurricane deductible. However, it’s application, while much easier to understand, is much broader (i.e. bad for you). A wind/hail deductible will apply for any wind or hail event including hurricanes, tropical storms, hail, nor’easters, a random gust of wind, and of course tornadoes. So, anyone who was struck by a tornado last week with a named storm deductible would have their regular “all-peril” deductible apply, most commonly $1000. However, anyone who was struck by a tornado with a wind/hail deductible will have the higher wind deductible apply, often 1%-5% of the dwelling amount. A $300,000 dwelling, for example, with a 2% wind deductible will have a $6,000 deductible.
The bottom line
When shopping for, or reviewing your homeowners policy, a Tropical Cyclone/Named Storm/Hurricane Deductible is a better option for you than a wind/hail deductible. A 1% Hurricane deductible is generally available in Hampton Roads and so if a company cannot give you a 1% Hurricane deductible, or better, check around. A policy with a 1% hurricane deductible from one company might not cost much different than a 2% wind/hail deductible from another company but represents thousands of dollars difference in exposure to you, the homeowner, as well as a much greater potential for the higher deductible to be applied.
About The Braun Agency
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Wishing you much financial success,
The Braun Agency’s mission is to help you get from where you are to where you want to be financially by planning, achieving your plan and protecting your plan from unexpected events. In the process, our goal is to deliver insurance services in a manner that exceeds your expectations. See what The Braun Agency can do for you today. Give us a call at 757-452-4563 to speak with one of the licensed, professional members of our team or request a contact here. The Braun Agency. We’re on YOUR side. 757-INSURANCE.