Insurers adding new, much higher deductibles for wind and hail damage
Recently, insurers have started adding a second, much higher deductible for damages caused by wind and hail.
If you are shopping for a new homeowners policy or recently renewed your policy, you may want to examine the policy in detail as some insurers are sneaking in a new line item that may have a big effect on your pocketbook if you ever need to make a claim due to wind damage.
Insurers are bumping up the deductible on wind, hail and other damage, especially when it is your roof that is in need of repair or replacement. Previously, homeowners had one deductible that covered the entire house and the homeowner was able to choose their own deductible. Deductible amounts varied with common ones being $250, $500 or $1,000. In most cases the higher the deductible, the lower the rate.
Recently, insurers have started adding a second, much higher deductible for damages caused by wind and hail. In many cases, roof damage is signaled out but it can also relate to other parts of your home. The shocking news is that instead of a set dollar amount, the deductible is a percent of your home’s worth, which can drastically raise your contribution if your roof is damaged or destroyed. Other insurers are instituting a depreciation program that can leave you holding the bag if your roof is old when its damaged.
These changes are being adopted by major, nationwide insurers as well as smaller, specialty insurance companies. As an example, customers in some hurricane prone areas are being hit with a 5 percent deductible when it comes to hurricane damage. If your home is currently valued at $200,000 you may be facing a $10,000 deductible if you find yourself in the path of a hurricane. While finding a $1,000 to cover your deductible is doable for most, an extra $10,000 would be a big hit to the family budget.
Why are insurers jacking up deductibles? Extraordinary losses caused by both Hurricane Ike and Katrina promoted insurers to start making changes to their policies. According to data from The Property Claim Services, Hurricane Katrina was the most costly hurricane in United States history. Insurers forked out $41 billion in 2005.
One major insurance company has added a depreciation section to their policy that targets roof damage. If a roof claim is made your roof will be depreciated by 3 percent annually. Again, the numbers look pretty grim if your have an older roof. A ten-year-old roof would be depreciated by 30 percent, which means that with a $15,000 roof you are on the hook for roughly $5,500. This is added to your regular deductible, so if you have a $1,000 deductible on the rest of your house you are looking at a $6,500 bill to get your roof fixed or replaced.
It is still possible to get a flat rate deductible on your homeowners policy. Where you live can make a big difference. If wind damage is rare in your area, most insurers will offer a flat rate deductible. If, on the other hand you reside in hurricane country, read your policy carefully and shop around for a flat rate deductible policy.
Quick Note on Discounts for New Roofs
If you live in Georgia, then please call 770-884-4588 and speak with one of our licensed agents. For Georgia homeowners, we are now offering discounts to homeowners. If your home has a new roof, then this home improvement update could help you save $300 to even $700 a year in premiums. Please call or get an online quote today to receive affordable homeowners insurance rates in your area.