Four Questions to Ask Before Hurricane Season Hits

Hurricane Sandy as seen from NOAA's GOES-13 satellite.
Source: NOAA
Hurricane Sandy as seen from NOAA's GOES-13 satellite.

On storm surge maps that show the ravages of Superstorm Sandy, my house sits on a rare patch of dry land surrounded by swaths of water.

Located in Gravesend, Brooklyn, nestled just above Coney Island, the house did not sustain any damage, despite the fact that the water came within a few blocks.

With hurricane season 2013 forecast to be "active," according to NOAA's Climate Prediction Center, I got nervous about my luck the next time around. I did what all homeowners should do - I called my insurance agent to see if my policy needed any updating.

In the process, I learned that it helps to ask a lot of questions. Here are four key things to ask about as you prepare for hurricane season:

1. Do I need flood insurance?

While there are no statistics yet on how many flood policies have been sold since the storm, Jeanne Salvatore, senior vice president of the Insurance Information Institute (III), a research group for the insurance industry, says she hears from plenty of people who regret not having had flood insurance - either as renters or owners - during the last few storms.

"Low-risk does not mean no risk," Salvatore says.

Flood insurance has a 30-day waiting period before it kicks in, so it's best to get a policy before storm season starts. Even if another monster storm never comes, a bad downpour could cause enough damage that I'd be in a dire financial straits if I wasn't covered.

"Anyone can be in a flood zone, just if water builds up on your street," says James Whiter, a licensed sales producer for the Desimone Agency in Brooklyn, an Allstate provider.

Whiter's office has written about 200 flood policies since Sandy, with prices ranging from around $400 (what I ended up paying) for a home that is not in a designated flood zone to $4,000 or more for homes with the highest levels of risk in Brooklyn.

If you don't already have an insurance broker, the website can direct you to an agent near you that sells policies - since the government sets the prices, any agent should quote you the appropriate amount.

2. Do I have enough coverage?

Insurance is a what-if proposition. One big driver of cost that you can alter is the deductible. Homeowners who paid out of pocket for a lot of damage last year might be tempted to increase their coverage, even if it costs a little more, or raise deductibles during storm season and lower them later. But that may be a bad habit to get into.

"I'm fairly certain that insurance companies are not going to be interested in doing that on a regular basis, but if you, on occasion, want to make a change, most insurers will accommodate that," says Christopher Hackett, director of the Property Casualty Insurers Association of America, a trade group.

Lower deductibles might not be the best choice overall, even if you fear tree limbs falling off during every storm.

"On average, people only file a claim every eight to 10 years, so there's a significant savings by raising (your) deductible," says III's Salvatore. Spend more to have coverage for the replacement cost of your home rather than the cash value, or raise the dollar value of coverage on your possessions, Salvatore says.

Regularly calling your insurance agent to ask questions has another benefit - you will likely remember to tell the agent if you've made any significant improvements to your home and get them covered properly.

Even upgrading your kitchen counters can require a few tweaks to a policy, says Hackett. Also note if you've added any improvements that could get you a discount - like storm shutters or hail-proof shingles.

Renters should get a flood insurance policy, too. That's because renter's insurance won't cover a flood, and your landlord's insurance policy will only cover structural damages.

3. Can I get rid of the hurricane deductible?

Since 1992's Hurricane Andrew, 19 states have added hurricane deductibles - some states dictate the terms, such as Florida, while some states make it negotiable. In other parts of the country, there may be separate deductibles for wind, hail or earthquake damage. Typically, the rates range from one to five percent of the home's insured value.

If you live in an area where deductibles are not mandatory, you may be able to pay a higher premium and reduce - or get rid of - that deductible, says Damon Schumaker, an underwriting section manager for State Farm. You most likely will be able to change this only once a year, however.

For those in the path of wildfires, special deductibles for fire damage are unusual. Check what coverage you have for alternate living arrangements in case you are evacuated for a length of time.

4. Can I prepare a claim ahead of time?

Your family disaster plan should include more than just a kit with water and medical supplies. To be truly prepared, it's best to talk to your insurance agent ahead of time to find the best numbers to call if you have a claim and to have all the information on hand that you need.

There are apps and checklists to help you create a home inventory, like III's Know Your Stuff, Know Your Plan and Know Your Coverage suite of free iPhone and Android apps. You can also create call lists for emergency situations.

"You should talk about a disaster plan when there is not a disaster," Salvatore says.