As the world is ever changing, so are the way insurers interpret the natural disasters and how they will respond to cover these terrible events. Over the years, the U.S. has seen an increase in earthquakes, tornadoes, hurricanes, blizzards and more. The insurance industry now has created a stricter view of how they will cover these events. In particular, as we have seen with Hurricane Katrina and Hurricane Sandy, the insurance industry has developed a new terminology and deductible related, specifically, to “named storm/named windstorm.”
A storm is officially called a hurricane when it forms over the Atlantic and the Eastern and Central Pacific Oceans. Tropical storms with their fast winds, may be less powerful than hurricanes but still can cause an incredible amount of damage. Both hurricanes and tropical storms, can be named. Names are given to provide people with a quick reference point.
Once a tropical storm or hurricane is named, the “named storm/named windstorm deductible” will apply. Many of these deductible clauses work by requiring a deductible that’s a percentage of the home or commercial building’s value. For example, 2%, 3%, 5% up to 10% of the total building limit with a minimum of $250,000. More often, the policies’ will not specify a maximum pay out for the insured. For property locations in high hazard flood zones, the Federal Government can offer a small flood policy covering the deductible from the National Flood Insurance Program.
Many serious considerations should be discussed and outlined prior to choosing an insurance company and policy for your home or commercial property. It is important to have risk consultants review insurance policies and proposals on your behalf to ensure coverage for any disaster. The ALS Group specializes in the review of such documents and can work with your broker and the insurance company to ensure you are covered for any storm related event that may come along.
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