The Insurance Guy: 2016

Tuesday, November 15, 2016

Named Storm (Hurricane) versus Wind and Hail (windstorm) Deductibles...

Named Storm (Hurricane) versus Wind and Hail (windstorm) Deductibles...

Overview: A deductible is the amount of loss paid by the policyholder before any loss is paid by the insurer. For most “perils” (such as fire damage and theft), the standard deductible is a flat dollar amount (e.g., $500 or $1,000). This means a policyholder would be responsible to pay the flat dollar amount out of pocket for a loss.

Recommendation:

I would always recommend a Named Storm deductible if given the option due to having coverage for wind and hail (windstorm) at the regular All Other Peril (AOP) deductible which is usually $1,000 or $2,500 instead of a higher amount which is usually a percent of the total Home Dwelling coverage.

An example:

A home owner has $300,000 of coverage on their home. A bad wind storm or tornado came through and blew their roof off. If this person had a $1,000 AOP deductible along with a 5% wind and hail deductible then they would be responsible for the first $15,000 ($300,000*5%). However, if they had a Named Storm deductible then they would simply be out the AOP deductible of $1,000.

Deductibles:

I: Named Storm / Hurricane

- Named Storm deductible applies to a weather event declared as a hurricane, typhoon, tropical storm or cyclone by the U.S. National Weather Service, the U.S. National Hurricane Center or the U.S. National Oceanic and Atmosphere Administration, and where a number or “name” has been applied (e.g., Hurricane Andrew, Superstorm Sandy, etc.). Any loss must have been caused or resulted from the named storm event.

-Hurricane deductible applies to damage solely from a hurricane as categorized by the National Weather Service or U.S. National Hurricane Center.

II: Wind and Hail (windstorm)

-Wind and Hail (windstorm) deductible may apply to any kind of damage from a wind or hail event. For example, if a tree falls on a policyholder’s roof on a windy day, the claim would be subject to the wind deductible.

III: Flood

Flood damage, however, is covered only if a separate flood insurance policy was purchased, generally from the National Flood Insurance Program or from a private company.

For other questions please feel free to give me a call.

Michael Fillers, CPIA, NFIP
Morris Insurance Agency, LLC

3032 Dauphin Square Connector

Mobile, AL 36607

D.251-473-5119/F.251-473-6301/C.251-753-8011

Email: mjfillers@morrisinsmobile.com

Web: www.MorrisInsMobile.com

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reference: http://www.naic.org/cipr_topics/topic_hurricane_deductibles.htm

Difference between Basic, Broad and Special Form?

What is Insurance Causes of Loss Form anyway?

What is the difference between Basic, Broad and Special Form? These coverages are commonly misunderstood if understood at all.

Basic Form

The Basic Form policy is the least comprehensive of the three coverage options. Basic Form policies only cover the specifically named perils. This means that if a coverage is not specifically named in the policy, there is no coverage. A Basic Form policy tends to be quite limited in scope and should be used with care. It is usually offered by carriers when the property is not in good condition, is under remodel, vacant or is old and without wiring, plumbing or heating updates.

Coverages included in a typical Basic Form policy are:

Fire
Lightning
Windstorm or Hail
Explosion
Smoke
Vandalism
Aircraft or Vehicle Collision
Riot or Civil Commotion
Sinkhole Collapse
Volcanic Activity

Broad Form

Broad Form policies offer more coverage than Basic Form. They include coverage for all of the same hazards in a Basic Form policy plus several additional hazards which are expressly named. Like the Basic Form policy, a Broad Form policy covers only named perils. If the coverage is not specifically listed, it is excluded.

Coverages included in a typical Broad Form policy are the same as in the Basic Form policy plus the following;

Burglary/Break-in damage (THEFT)
Falling Objects (Tree’s)
Weight of Ice and Snow
Freezing of Plumbing
Accidental Water Damage
Artificially Generated Electricity

Special Form

Special Form coverage is the most comprehensive of the three options. Note that Special Form policies read differently than a Basic or Broad Form policy. In a Special Form policy, instead of the document listing what is covered, all perils are covered except for what is specifically excluded in the policy.

The Special Form policy reads opposite of a Basic or Broad Form policy. All unlisted perils are covered perils. This can be extremely beneficial to the insured and is the ideal coverage to have.

Common Special Form Policy Exclusions:

Ordinance of Law
Earthquake
Flood
Power Failure
Neglect
War
Nuclear Hazard
Intentional Acts

You should carefully read and review the TYPE of policy form with your insurance agent. Carefully review the covered or excluded perils. In any property policy, make sure you understand which risks are covered and which are excluded. Finding out what you do not have coverage for after a claim is never fun.

Many of the excluded coverage’s such as vandalism, theft, back up of sewer and drains, building ordinance, theft and loss of income can often times be added on to the Basic, Broad and Special Form policies. Your agent will be able to tell you if they are available.

If you have other questions don't hesitate to call.