Do I Need Named Storm Coverage?

Posted on June 15, 2024


Frances Badayos | author

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ICHQ | Site Author

It’s no surprise to Louisiana residents that the Gulf Coast states are very susceptible to hurricanes and tropical storms. Based on data from 1994-2015, the annual likelihood of New Orleans experiencing a tropical cyclone is 92%.

If you are filing a claim following a named hurricane or tropical storm, Insurance Claim HQ is ready to assist you as you pursue major storm coverage from your insurer.

What Are Named Storms?

Named storms are large, organized weather systems with defined surface circulation and high winds at least 39 miles per hour. When a storm meets these factors, the National Hurricane Center or the United States Weather Service assigns it a name. Named storms generally cause more destruction than regular storms.

What Is Named Storm Coverage?

Named storm insurance coverage is basically having enough coverage to pay for losses following a named storm. It isn’t a separate type of policy sold by insurers.

Because of their characteristics, insurance companies anticipate higher payouts following a named storm and treat coverage differently. Your out-of-pocket expenses are higher than for other coverage policies.

About named storm deductibles

In Louisiana, 19 other states, and the District of Columbia, homeowner’s insurance policies include named storm deductibles. They apply to damage caused by a named storm and are higher than the usual deductible.

What Are Examples of Named Storm Deductibles?

A named storm deductible usually ranges between 1% and 10% of the insured property’s value. If your home’s value is $400,000, for example, and your named storm coverage deductible is 5%, you would need to pay $20,000 out of pocket before insurance coverage begins.

These storm deductibles can also be a fixed dollar amount.

Ensuring you have the money for your deductible

Since this type of deductible is a significant dollar amount, homeowners need to ensure they have money on hand to cover it. It’s also crucial to understand the policy terms.

You have some control over your deductible amounts for most insurance policies. Generally, you have a lower deductible if you pay higher monthly premiums. This flexibility allows you to adjust your expenses based on your budget.

If you have questions about your policy and how much named storm insurance coverage you have in the event of property damage, call your agent or the experienced staff at Insurance Claim HQ.

Why Do Insurers Use Named Storm Deductibles?

Insurance companies use storm deductibles to reduce their financial exposure following an event that causes widespread losses. Insurers began using them after Hurricane Andrew in 1992. They spread more widely after Hurricane Katrina in 2005 when insurance companies faced a $64 billion loss.

Balancing named storm coverage costs

The principle behind named storm or hurricane deductibles is to shift some of the financial burden onto insured parties while keeping policies affordable and available. Insurance companies and reinsurers struggled to meet their financial obligations after Hurricane Andrew; costs have continued to rise since then.

As more homes and businesses move to coastal areas and named storms increase in power and frequency, insurance companies must find ways to limit potential losses.

Do You Have To Pay the Deductibles More Than Once?

Louisiana has a deductible statute that outlines how insurance companies can handle them.

Insurance companies that have named storm coverage deductibles can apply them annually to each hurricane or named storm loss in a calendar year. However, you don’t necessarily have to start over each time.

If you incur losses during more than one named storm or hurricane in a calendar year, your insurance company may:

  1. Apply a deductible to the succeeding storms or hurricanes that equals the remaining amount on your separate deductible or
  2. Use the amount of the deductible that applies to all perils other than the named storm or hurricane, whichever is greater.

The insurance company may require you to keep your receipts and records from previous storms to prove what you spent.

How Do Insurance Companies Determine When To Use the Separate Deductible?

Louisiana law allows insurers to decide when the separate deductible kicks in. Some companies use the National Hurricane Center’s officially named storms. It doesn’t matter if the storm is a hurricane, tropical storm, or subtropical storm as long as it has an official name.

Other insurance companies use the type of storm — a tropical storm or hurricane — as the criteria for using a separate deductible. A subtropical storm would not kick in the separate deductible for these policies, even if it had a name.

Need Help Deciphering Your Named Storm Coverage?

There are many complexities when it comes to named storm insurance coverage. While Louisiana’s statutes provide insurance companies with directives, insurers can still decide which types of storms use the separate deductible.

Also, if you don’t have records of your expenses from previous storms, you may need clarification when you meet your deductible.

With so many variations between insurers and policies, you can benefit from talking to the knowledgeable staff at Insurance Claim HQ. Our lawyers can help you understand your obligations so that you can recover fully from your insurance policy.

Legal Assistance After a Named Storm From Insurance Claim HQ

Contact our hurricane damage lawyers at Insurance Claim HQ to get help with your named storm coverage. We understand the insurance industry and the types of homeowner’s insurance policies issued on the Gulf Coast.

If you have questions, we are here for you. We can help you file an accurate, on-time claim after a storm. We can also represent you if you believe your insurer acted in bad faith. Call us today at 844-964-0778 or contact us online to learn more.