When a consumer purchases a home in Rhode Island there are two different insurance policies (homeowners and flood) and two different insurance deductibles (all peril and windstorm/hurricane) that they should be aware of. The first deductible, “all perils,” is a flat dollar amount ($500, $1,000, $2,500 etc). This covers most anything that could happen to your home and property (fire, theft, ice, etc) except flood and windstorm/hurricane damage.
If the property is in a flood zone the consumer would have to purchase a second insurance policy that covers just flood. If the property is not in a flood the zone the consumer can still purchase a flood policy at a substantially cheaper price. No homeowners insurance covers a flood regardless of the location of the home. The simple definition of a flood is any water the comes from the ground up into your home.
The windstorm/hurricane deductible is the final piece of the insurance protection. This is a percentage deductible based on the dwelling value of the home insured. The most common options are 1%, 2% and 5%. The higher the percentage, the higher the cost out of pocket for the insured when damage is done by a hurricane/windstorm. For example if the home is insured for $500,000 and the insurance policy has a 1% hurricane/windstorm deductible the price out of the homeowners pocket before insurance kicks in is $5,000. At 2% it is $10,000 and at 5% it is a $25,000 deductible.
When looking at a current policy or reviewing a quote for a new policy, the consumer needs to be aware of the language used. Insurance companies use the words “hurricane,” “named storm,” “windstorm,” and “windstorm and hail.” Each variation changes when the percentage based deducible will apply. The most limited in scope is when the deductible applies just for hurricanes. This wording is seen less frequently after the “Superstorm” Sandy, which was not technically a hurricane. A “named storm” is any storm named at a tropical storm level and continues until the storm passes and dissipates. Finally a windstorm is any storm with high winds including tropical depressions and nor’easters, and some polices have added hail damage to the percentage based deductible on top of wind.
Now on to the good news. As an independent broker, I represent multiple companies that will eliminate the hurricane/windstorm deductible entirely. Large insurance companies like USAA, GEICO and Progressive do not offer homeowners policies in Rhode Island at all. Others like Allstate and Nationwide require at least a 5% windstorm deductible. Smaller coastal insurance companies like Spinnaker Insurance, Coastal Agents Alliance, and Narragansett Bay Insurance offer competitive prices with NO separate hurricane deducible. The all peril deducible with these companies will cover all hurricane or similar windstorm damage under one flat low dollar amount ($500, $1000, $2,500 etc).
If a client is watching the weather and sees a large storm barreling up the east coast and the home is insured with a company that offers different windstorm options, they can contact their insurance company or broker to change their deductibles up until a moratorium is placed on Rhode Island. A moratorium normally occurs when a hurricane watch is placed on the state or county. This varies by company and some will allow you to change deductibles or place new business polices up until a hurricane warning is in place. The sooner the insured reacts and contacts the company or broker the better. This fear of watching the weather channel can be avoided entirely if the policy they have in place already as no separate hurricane/windstorm deducible.
In closing, it is important to educate any potential buyer and current coastal Rhode Island homeowner of the different deductibles and options they have on a policy and how to best protect their assets in the event of a major storm. Using a licensed insurance broker is one of the best ways to insure you have the correct coverage with the deductible that fits the clients risk tolerance.