Homeowners’ insurance is a must-have policy for homeowners who want to protect their investment. Most of the time it’s required by the mortgage company, as they want to protect their investment too. Homeowners’ insurance policies usually cover certain forms of “weather damage,” but many residents don’t realize that their policy may have gaps in the coverage due to exclusions that leave them vulnerable in the event of a flood, hurricane, tornado or other natural disaster – until it’s too late.
Homeowners’ Policies Often Have Wind and Hail Exclusions
If a storm is under a certain wind speed, or wind damage to a home is simply cosmetic, the general homeowners’ policy may not cover the damages. The American Association of Insurance Services (AAIS) created a “Cosmetic Damage Exclusion” in 2013 for homeowners’ insurance policies, which allows insurers to exclude payments for damage to exterior features, such as walls, roofs, doors and windows, from wind and/or hail if the storm impacts only the appearance but not the function of these features. Additionally, homeowners may be surprised to find out that when wind damage allows rain to leak into the home and cause water damage, it may not be covered by their homeowners’ policy or their flood policy.
In hurricane-prone states where cosmetic damage from storms is fairly common, homeowners are often required to purchase separate wind insurance coverage, known as a “windstorm policy” which protects homeowners against any hurricane-related wind and rain damage.
Wind Deductibles are Often More Costly for High-Value Homeowners
Even when wind damage coverage is included in a homeowners’ insurance policy, wind damage can still be costly for homeowners. In 19 states as well as the District of Columbia, wind deductibles are applied to wind damage claims. These deductibles are calculated as a percentage of the home’s insured value and can be as high as 5% of the value. For a $500,000 home, that’s $25,000 that has to be paid by the owner before their insurance claim will be paid out.
Agents who partner with an experienced coastal insurance agency can offer their clients a variety of solutions to some of the above wind damage challenges. For example, a wind deductible buy down policy can help reduce a client’s wind deductible to a smaller percentage, or even nothing at all. There are a lot of factors to take into consideration when determining types of coverage to supplement a homeowner’s’ insurance policy with, but partnering with an MGA and wholesaler that has wind exposure expertise can make it easier for agents to provide the wind insurance solutions their clients need.
About Wilmington Insurance Agency
Wilmington Insurance Agency delivers comprehensive coastal property solutions. We are a Managing General Agency and provide independent insurance agents with property and liability insurance solutions for residents and businesses primarily in Maryland and Virginia. We work alongside our sister company, Wilmington Insurance Company, established in 1996 and providing Property & Casualty commercial lines business, homeowners, and condominium insurance in the state of Delaware. To learn more about how we can help you to expand your book of business in the coastal market, contact us at (302) 231-2800.