Describes a Named Storm Deductible
A named storm deductible is a particular kind of insurance deductible whereby damage to a property results from a storm formally identified by the National Hurricane Center (NHC), the National Weather Service (NWS), or another government meteorological organization. Usually covering hurricanes, tropical storms, and other major weather occurrences, this deductible is not the same as the regular deductible included in a homeowners insurance policy.
How a Named Storm Deductible Works
Your homeowner's insurance policy may call for you to pay a larger deductible than usual should a named storm damage your house—from severe winds, heavy rain, or flying debris. Usually a percentage of your home's insured value, the named storm deductible is not a fixed amount—say $500 or $1,000.
If your house is insured for $300,000 and your named storm deductible is set at 5%, for instance, you would be liable for paying $15,000 out of pocket before your insurance company starts funding rebuilding or repair costs. Usually ranging from 1% to 10% of the insured value of your house, your policy and the state where you live will affect the percentage amount.
When the Named Storm Deductible Applies
When the NWS or NHC announces an official storm, say a hurricane or tropical storm, and the storm damages your property, a named storm deductible kicks in. It does not apply to ordinary thunderstorms or other events connected to the weather that are not categorized as designated storms. Reviewing your policy will help you to know when this deductible would apply, as the specific trigger for this deductible differs depending on your insurance policy.
Named storm deductibles are typical in several states vulnerable to hurricanes and tropical storms, including Florida, Texas, and Louisiana. They enable insurance companies to control the significant expenses related to extensive damage from big storms, which might result in simultaneous large-scale claims.
The Value of Understanding Named Storm Deductibles
Particularly if set at a high percentage, named storm deductibles can have a major cost impact. Knowing their deductible will help homeowners to be ready for possible out-of-pocket expenses should storm damage be caused. You might set aside resources to pay for this cost in case of a storm or look for plans with reduced named storm deductibles to help lessen the load.
Conclusion
Usually at a larger proportion than a normal deductible, a named storm deductible is a unique deductible that applies should a named storm damage your property. Being financially ready during hurricane season or other major storms depends on knowing this side of your homeowner's insurance.