Acentria Insurance Blog

The heavy rainfall, high winds and storm surges associated with hurricanes and other intense storms can devastate any home or business property, even those located hundreds of miles off of a coast. With the potential to cause tens of billions of dollars in damage, insurance companies and carriers generally use special, “named storm deductibles,” to provide coverage in the event of a loss.

Named storm deductibles are typically higher than traditional fixed-dollar deductibles for losses related to fire, theft and even water in some cases. Named storm deductibles are only triggered under specific circumstances and can vary based on location. However, it is important to know the details of these deductibles so your family, your home and even your business are prepared in the event of a severe storm.

What’s in a Name?

Named storm deductibles are triggered by just that—a tropical depression, tropical storm or hurricane that is severe enough to be named by the National Weather Service (NWS).

The NWS first started to name storms to make it easier for the public to track and follow severe storms as they developed. However, after large hurricanes and tropical storms began to cause large amounts of damage, insurance providers began looking for ways to mitigate their losses. Named storm deductibles, tied to the time periods surrounding the National Weather Service-named storms, help insurance providers mitigate losses caused by a named storm.

It is important to note that other organizations have started to name storms. The Weather Channel, a privately owned weather organization, recently began naming winter storms in order to make tracking them easier for its viewers. However, insurance providers only apply named storm deductibles to storms named by the NWS.

The Triggers for Named Storm Deductibles

The triggers for named storm deductibles can vary based on the insurance provider and location, although almost all triggers generally include a timing window, such as 24 hours before a storm is named by the NWS to 48 hours after it is downgraded to a tropical storm. During this window, your named storm deductible will apply to any damage instead of the normal wind and hail deductible.

Other triggers can include when a hurricane makes landfall or when a hurricane watch is declared. Because the triggers for named storm deductibles can vary significantly, it’s important to look up the exact rules as defined by the state you live in and your specific insurance policy.

Price Differences

Named storm deductibles are generally higher than regular deductibles because they are based on a percentage rather than on a fixed dollar amount. Most named storm deductibles are between 1%-5% of your total insured amount, but in high-risk areas, deductibles can reach as high as 10%.

For example, imagine that the Dwelling Coverage A on your home insurance policy is insured for $500,000. If your home is damaged by normal wind or hail loss, you would pay a regular, fixed-dollar deductible—usually $500 or $1,000—before your insurance provider would provide coverage for the remaining damage. However, if the damage was caused during the window of a named storm deductible, your deductible would be calculated using a percentage. For a 5% deductible, this would amount to an out-of-pocket expense of $25,000 before your insurance provider would pay for damages.

What it Means for You

Deductibles for damage caused by named storms are higher in order to mitigate the financial risk to insurance providers while still offering premiums that are relatively low. Additionally, many insurance providers believe that the high deductibles will encourage homeowners and other property owners to take proactive steps to protect their homes from severe storms.

For more information on named storm deductibles, tips to protect your home from severe storms or a review of your current home or property insurance policy, contact us today. 

Life Events that Affect Your Insurance Needs 

As we age and reach different milestones in our lives, our insurance needs change. In order to ensure adequate coverage, contact a licensed insurance agent at Acentria Insurance if you’re affected by any of the following life events:

• New homeownership— Purchasing a new home is a big investment—one that you will want to protect. After purchasing a home, ensure that you have homeowners insurance to protect against things like fire, weather damage, theft, vandalism and accidental damage. This advice also holds true if you are buying a new condo or vacation home.
• Home renovations—Once you own a home, you may want to make updates to create a better living space. Be sure to report major home improvements to your insurance company to protect any increased value to your home.
• New children—Having or adopting children is not only a huge life change, but it’s also a major financial commitment. As such, it’s important to purchase the right policy to secure your child’s future. Add your child as a beneficiary on any life insurance policies, and make sure your coverage is sufficient.
• Teenage drivers— Teen drivers often carry the highest risk of auto accidents. While you want your teen driver to remain safe on the road, costly accidents can happen without warning. Consider adding your teen driver to your auto policy, as it is generally cheaper than purchasing a separate policy.
• Retirement—When you retire, you may change residences. If you have more than one home, this is a good time to let your insurance provider know where you plan to spend your time.
• Valuable purchases—A standard homeowners policy has limited coverage for highly valuable items. Supplement purchases and gifts that exceed the policy’s limits with a floater—a separate policy that provides additional insurance.
• Marriage—When your marital status changes, so do your insurance needs. Marriage typically leads to the combination of households, vehicles and other property, so it is critical to update your insurance policies accordingly. What’s more, life insurance is vital to married couples as it can ease the financial burden in the event of an untimely death of a partner. Ask about discounts on car insurance for married policyholders.
• Purchasing or selling a business—If you’re an entrepreneur, there will likely come a time when you will either buy or sell your business. During these times of major change, the proper coverage is crucial.

Insurance is critical for nearly every stage of life. Seeking coverage should be an active process, and individuals shouldn’t assume their insurance needs remain steady over time. Contact us today to better understand your insurance and prepare for your future needs.

*Know Your Insurance is offered courtesy of Acentria Insurance and Zywave, Inc. The above statements should not be construed as legal advice. Readers should contact legal counsel or speak with a licensed insurance professional for appropriate advice.

As this year’s hurricane season enters its peak, predictions have intensified around both the number and intensity of storms we can expect across the Atlantic coast. If you live in the area, it’s critical to start preparing now - before a storm is headed your way - in order to protect the safety of both loved ones and your home.

Take a moment to explore what’s expected for the remainder of the season - and find out how you can take action, right now.

What’s on the hurricane horizon?

The National Oceanic Atmospheric Administration (NOAA) recently issued its annual mid-season update, forecasting a 65% likelihood of an above-normal hurricane season. NOAA also upped its prediction of the number of storms we can expect from six to 10 hurricanes with winds of 74 mph or more (May forecast) to seven to 10, with three to five bringing winds at 111 mph or greater.

How long will hurricane season last?

Generally, peak hurricane season begins in August and continues through October. These months present the most favorable conditions for tropical storms and hurricanes thanks to highly developed African easterly waves and lessening Saharan air layers, low wind shear, rising sea-surface temperatures and more atmospheric convection.

This season, however, NOAA warns of a potential La Nina pattern that could form over the eastern equatorial pacific that would extend hurricane season into November.

Why prepare now - and how?

As we face more storms of higher intensity and a potentially prolonged hurricane season, how can homeowners get prepared? Even if you’re not certain that a hurricane is headed your way, there are steps you can take right now that will better position you in the event that you wind up in a hurricane’s path. As a result, you can limit the property damage that occurs from storm surges, wind damage and flooding - and most importantly, stay out of harm’s way.

Pre-storm preparedness:

• Document your possessions with photos and/or videos
• Print important items like IDs and insurance cards and store them in a waterproof container
• Review your home insurance and flood policy with your insurance agent to identify any possible coverage gaps. Please note, any coverage changes may be subject to a 30 day waiting period or storm-related binding restrictions.
• Create an evacuation plan - how will you leave? Where will you go?
• Designate an emergency contact
• Stock up on supplies: backup chargers, non-perishable food, bottled water, flashlights, etc.

As we can see, many of these items involve forward planning, like setting up a meeting with an insurance agent or buying items that could be in short supply once a storm is imminent. By taking the time now to check these items off, you can lower your risk from both a liability and safety standpoint. Plus, you can reduce the stress of an already challenging situation should a storm arise in your area.

Now let’s look at what you can focus on once you know a tropical storm or hurricane is likely to arrive.

When a storm is forecast to make landfall in the next few days:

• Fill your gas tank(s) and refill prescriptions
• Keep electronic devices like your phone fully charged
• Take precautions to secure your home with shutters or alternative methods
• Secure any outdoor furniture, garbage cans, etc. that could become flying debris
• Share your storm plan with a family member, friend or neighbor

Finally, be sure to follow any and all evacuation orders from local authorities. In the event that you are in a storm, avoid floodwaters and fallen power lines at all costs.

One final tip

Keep these steps handy as you get prepared for the remainder of the hurricane season. Increase your readiness in the event of a hurricane, be prepared and get storm ready!

Have you reviewed your coverage? No time like the present

The 2021 hurricane season is showing no signs of slowing down, so why wait to review your coverage? Connect with an Acentria Insurance agent today and make sure your home has the right level of protection moving forward.

Your homeowner insurance policy can offer financial protection in the event of an unexpected disaster involving your home or personal property. But how you will be reimbursed following a claim depends on the type of coverage you have. There are two main valuation methods when it comes to homeowners insurance—replacement cost coverage (RC) and actual cash value coverage (ACV). By understanding the difference between these valuation methods, you can make informed decisions about your homeowner insurance policy(s) and secure coverage that meets your needs.

Key Differences Between Replacement Cost and Actual Cash Value
Although replacement cost coverage and actual cash value coverage can both offer financial protection in the event of a claim, the amount that your policy will pay out differs between these two valuation methods.

• Replacement cost coverage can offer compensation for the cost of replacing your stolen, damaged, or destroyed property with a brand-new version (as long as it’s similar in kind and quality to the original). For example, if your couch is destroyed in a house fire, replacement cost coverage would reimburse you for the cost of purchasing a comparable new couch. In other words, replacement cost coverage will replace your property without any deduction for depreciation.
  • This form of coverage can be especially beneficial in protecting against major losses, such as significant damage to the physical structure of your home or expensive items within your home. However, keep in mind that replacement cost coverage typically requires you to pay a higher premium. In addition, remember that you will only be compensated up to your policy limit amount—if you experience a covered loss that exceeds your policy limit, you may have to cover the difference. If you are concerned about the risk of a covered loss totaling more than your policy limit, be sure to consult your trusted broker to discuss additional policy options—such as guaranteed replacement cost coverage or extended replacement cost coverage—which can provide further financial protection.
    
• Actual cash value coverage, on the other hand, can offer compensation for the depreciated value of your stolen, damaged or destroyed property. This value is determined by the age, condition and expected remaining useful life of your property. Under this coverage, you wouldn’t be reimbursed for the full cost of replacing your destroyed couch from the above example. Rather, you would be compensated for the current market value of the couch, based on the condition it was in before the fire. That being said, even if you initially purchased the couch several years ago for $2,000, you might only be reimbursed $1,000 for your loss due to depreciation.
  • Although this form of coverage typically offers reduced compensation in the event of a covered claim, you will likely save money on your policy premium. Actual cash value coverage can be more suitable for individuals that live in low-risk areas (e.g., locations, where incidents such as heavy winds, fires or theft are less common,) or own fewer expensive items.

Which Coverage Is Best for You?

There are pros and cons to both replacement cost coverage and actual cash value coverage. In order to select the best coverage that meets your specific home insurance policy needs, follow these steps:

• Determine what you can afford by assessing the impact of both coverages on your financial stability. It’s important to consider the difference in premium costs and claim compensation amounts between each form of coverage.
• Create a home inventory checklist (be sure to include photos) of all of your belongings and their original value, as well as an estimate of their current value. This practice will help you better determine which coverage offers the best protection for your unique belongings. Keep in mind that certain high-value items—such as jewelry, collectible items or fine art—won’t be covered by your home insurance policy and will require specialized coverage.
• Calculate how much it would cost to rebuild your home if it were completely destroyed. Include added costs for labor, materials and any new or updated building codes in your community that you would be required to comply with. Avoid making a rough estimate for this cost—be as specific as possible to ensure you know just how much coverage you need.
• Analyze your personal risk and speak with a licensed insurance agent to review your options. Be sure to select a coverage option that fits within your budget, risk profile and comfort level.

We’re Here to Help

There are several factors to consider when determining which type of coverage is right for you, but you don’t have to navigate this decision alone. Acentria is here to walk you through your home insurance policy and provide expert guidance regarding which coverage option is best for you, your belongings and your wallet. For further coverage guidance, contact us today.