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Is your insurance policy ready for hurricane season?

A woman walks with her dog by homes damaged by Hurricane Sandy along the beach in the Rockaways on January 15, 2013 in New York City.
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A woman walks with her dog by homes damaged by Hurricane Sandy along the beach in the Rockaways on January 15, 2013 in New York City.

Predictions for a less-active hurricane season are no excuse for ignoring gaps in your insurance coverage.

The National Oceanic Atmospheric Administration has said it expects three to six hurricanes this season, which kicks off June 1 and runs through Nov. 30. The agency is also anticipating eight to 13 named tropical storms.

Better odds, maybe, than homeowners face in a typical season that has six hurricanes—but it only takes one big storm to do serious damage to your home.

"A lot of people don't have enough insurance when a hurricane hits," said J. Robert Hunter, director of insurance for the Consumer Federation of America.

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In particular, there are six coverage gaps that could result in higher out-of-pocket costs should a storm hit—or even mean you're not covered at all:

Flood insurance

"The biggest missing piece is usually flood insurance," said Hunter. Most homeowners' policies cover wind damage from hurricanes and other storms, but specifically exclude flood damage. For that, you'll need flood insurance through the government's National Flood Insurance Program or a private insurer.

Odds are good that even if you live in an area where flood insurance is required or recommended, you don't have it—by Hunter's estimates, just 10 to 40 percent of homeowners in flood zones do.

"Places with recent hurricanes tend to have more coverage than in areas where there hasn't been a hurricane in a while," he said. Shifting flood zones may mean homeowners aren't aware they're considered at higher risk than a few years ago. (FloodSmart.gov offers a tool to help assess risk and find flood insurance coverage.)

There's a 30-day waiting period for new flood insurance policies to take effect, so this is one gap that's best addressed early on in the storm season, said Loretta Worters, a vice president at the Insurance Information Institute. Already covered? Even then, be aware that flood insurance doesn't cover all flood damage. There are a number of exclusions and limitations, particularly for basements.

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Hurricane deductibles

In most cases, homeowners pay a deductible of as little as $500 before coverage kicks in. But if your policy has a hurricane or windstorm deductibles, you could be on the hook for an amount equivalent to 1 to 5 percent of the insured value of your home, said Peter Kochenburger, executive director of the University of Connecticut's Center for Insurance Law.

Policies vary on the amount and conditions in which the higher deductible comes into play. Some may specify hurricanes, he said, while others may go by wind speed, looping in even less powerful storms. That's good reason to shop around for a policy. This gap is also about your savings—it's a smart idea, if you live in an at-risk area, to pad your emergency fund to help cover the deductible.

Building ordinance coverage

Municipalities have beefed up building codes over the years, requiring new construction to be more resistant to floods, windstorms and other disasters. In many flood zones, for example, the lowest level of a home must be built at or above base flood elevation as determined by FEMA.

"What typically happens after a loss is, when you rebuild your home you have to meet those codes," said Worters. Doing so could add 50 percent to the cost, particularly for owners of older homes built before the ordinances were put in place. But if you have ordinance coverage in your policy, or as an added rider, it pays out that additional cost to build to code, she said.

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Anti-concurrent clause

Make sure there isn't an anti-concurrent clause in your policy, especially if you don't have flood insurance (say, because you live in an area deemed low risk) or have a more restrictive named-peril policy with lots of exclusions. "This clause says if you have coverage for one loss you're sustaining, like wind damage, but you don't have coverage for the other, like flood, then the insurer won't pay for either," says Hunter. Courts in some areas have upheld the insurers' right to use such clauses; others have sided with the consumer. "You may not get anything," he said.

General coverage gaps

Having the right coverage is a great start, but you also need the right amount. "You want to make sure your house is valued sufficiently so that if there's a complete loss, whether it's a hurricane or a fire, you can rebuild," said Kochenburger. If your coverage is less than 80 percent of the home's replacement value, many insurers will only reimburse you for a portion of damages. Update your policy as home values rise, and consider looking for one with extended replacement coverage (which reimburses you for up to 125 percent of the home's insured value).

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While you're at it, make sure you have enough coverage for possessions, too, said Worters. It helps to make regular home inventories, both to assess coverage needed and have a good record of what was there if disaster strikes. "If everything gets blown away, you're not going to have access to it," she said.

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