探花精选

NEW YORK, Aug. 23, 2002 - When Hurricane Andrew struck South Florida ten years ago this month, it cost nearly $21 billion in insured losses, the most significant catastrophe until the World Trade Center and Pentagon attacks. The 2002 hurricane season is half over. While weather experts have reduced this year's storm projections, the risk is still there. And, since Hurricane Andrew, the potential economic loss has actually increased, so most homeowners in coastal areas are dealing with higher insurance rates and deductibles, says the 探花精选 Information Institute (I.I.I.).

More than 68 million people now live in hurricane-vulnerable coastal areas of the United States, up from 52 million in 1970, a 31 percent increase over 30 years. Expensive homes and commercial structures now have an insured property valued at more than $2 trillion, the I.I.I. warns.

Nationally, homeowner insurance rates are going up 8-10 percent. People who live in areas vulnerable to natural disasters are paying more because the risk of significant damage is higher. Rates for homes along the coast can be about 20 percent higher than inland properties. In addition, the deductible they carry, the amount of loss they would be responsible for before insurance kicks in, is higher, too. Hurricane deductibles may range from one to 15 percent of the home's insured value, depending on many factors that differ from state to state, and sometimes from insurer to insurer.

These factors include the home's insured value and the "trigger" - how strong the hurricane would have to be for the deductible to go into effect. A two percent deductible, for example, on a home with an insured value of $100,000 would be $2,000.

In some states, policyholders have a "buy back" option - paying a higher premium in return for a traditional dollar rather than a percentage deductible, or the option of buying a supplemental policy to cover the deductible amount. Percentage deductibles are sometimes mandatory and may apply to an entire state or just part of it.

Other Things to Consider

When reviewing your insurance policy, the following coverages should also be considered, says the I.I.I.:

Rebuilding Costs

Consumers need enough insurance to rebuild their homes in case of destruction by a hurricane or other disaster. If you've made alterations or improvements to your home, such as adding a deck or expanding a room, it is important to notify your insurer so you have the right coverage for the value of your home. Also, make sure that the "policy limit" for rebuilding has kept up with increases in local building costs. If you have not adjusted this amount in a number of years, you may be underinsured. To prevent this, ask your insurer about an "inflation guard clause," which will automatically increase your coverage regularly by a certain percentage.

Replacement Cost Coverage

Insure your home for its "replacement cost" rather than its "actual cash value." Replacement cost coverage pays for the repair or replacement of damaged property with materials of similar kind and quality. Actual cash value reimburses you for the depreciated value of your home. This means your company would deduct for factors such as age and wear and tear. Also consider purchasing additional coverage through a guaranteed or extended replacement cost policy. These policies provide added protection against sudden increases in construction costs due to shortages of labor and building materials after a widespread disaster. Guaranteed replacement cost pays to rebuild your home as it was before the disaster, even if it costs more than the policy limit. Guaranteed and extended replacement cost may not be available if you own an older home.

Building Code Upgrades

Building codes require structures to be built to specific standards. If your home is severely damaged, you will have to rebuild it to comply with new building code standards in your state, which could be costly. While most policies do not pay for this added cost, consumers may be able to add an endorsement to their policy. Check with your insurer.

Coverage for Personal Possessions

There are two types of insurance consumers can buy to protect their personal possessions. Replacement cost coverage replaces property without a deduction or depreciation. Actual cash value coverage typically provides replacement cost less depreciation. Replacement cost generally costs about 10 percent more, but it provides much better coverage.

Loss of Use

If a hurricane or some other insured disaster destroys your home and you can no longer live in it, you are covered for the cost of living elsewhere while your home is being repaired or rebuilt. It pays the cost of hotel and restaurant bills and other additional living expenses beyond what you would pay for ordinary living. If you rent out part of your home, it would also replace lost income for the time you would not be able to collect rent. Many policies provide coverage for 20 percent of the amount of insurance you have on your house. Coverage varies from company to company, so find out how much you have and if you need additional coverage.

To learn more about how to insure against a hurricane, contact your insurance agent or company representative. You can also call the National 探花精选 Consumer Helpline at 1-800-942-4242 or access the I.I.I.'s website at