In 1992, Hurricane Andrew - the costliest hurricane in U.S. history at the time - left insurers holding the bag for $15.5 billion in losses. Most of these losses were in the Long Island and downstate New York area. Between 1994 and 2013, hurricanes and tropical storms caused the New York Metro area more than ten times the loss ($159.1 billion). In the aftermath of the damage, insurance companies want to make back some of the money they lost. As a result, premiums in these hard hit areas have risen dramatically. Coverage also took a hit. Hurricane and windstorm insurance deductibles are now a major concern for waterfront property owners and insurers alike.
As more Long Islanders move closer to the shorelines - and as property values increase - hurricane and windstorm deductibles aim to limit potential losses from hurricane and windstorm damage. A risk-sharing mechanism, hurricane and windstorm deductibles enable policyholders to bear more of the risk without raising overall premiums. However, lacking meaningful disclosure and clarity regarding state laws, hurricane and windstorm deductibles are an unjustified cost for plenty of waterfront property owners.
Another consideration is what insurance company should you choose? If you live under 5,000 feet to a body of water, your choices far fewer than even 5 years ago. Many New York Insurers have stopped writing homes near any body of water. (even a puddle!). Fortunately, Brooks-Waterburn Corp. has quality insurance companies that not only write Coastal Property Insurance but prefer it. They are priced competitively, and will protect your valuable asset.
Hurricane deductibles are far more costly than other causes of loss - such as fire damage or theft. More common than dollar amounts, insurance companies base hurricane deductibles on a percentage of the property’s insured value - to make waterfront property owners share some of the risk of damage from windstorms. Hurricane deductibles cost homeowners 2 to 5 percent of the home’s insured value.
The average homeowner deductible is between $500 and $1,000 - which is a mere fraction of the $25,000 hurricane deductible a homeowner might pay for a home insured for $500,000. Why do insurance companies charge such high deductibles? This is done mainly to save money. By moving the “smaller claims” back to the insured, insurance companies avoid paying millions of dollars in claims.
There are two different types of deductibles - Windstorm deductibles, and Hurricane deductibles. Insurance companies use “triggers” - or thresholds of storminess - to distinguish the difference:
New York Homeowners must consider many factors when selecting a hurricane or windstorm insurance deductible. There are pros and cons to each one. Hurricane deductibles are expensive - for example - but save homeowners money by lowering the overall cost of a Homeowners Insurance policy.
For storms that never reach the threshold to activate the hurricane deductible - or with damage already excluded from the homeowner’s policies (such as flooding) - waterfront property owners can save money by waiving the hurricane deductible. However, in the case of Superstorm Sandy, homeowners dodged hurricane deductibles but still paid similar percentage-based “windstorm” deductibles.
Whether you have the wrong type of hurricane and windstorm insurance - or are overpaying to be underinsured - trust the Coastal Homeowners Insurance professionals at Brooks-Waterburn Corp. to help you get the most from your waterfront property insurance. We have the expertise to help you select the best insurance for the right price - so that you and your family are better protected. From Riverhead to the Hamptons, Mattituck to Melville, we are your Coastal Property Insurance experts. Request a quote on this page or call us at 888-997-9801!