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    Wind Deductible vs. Hurricane vs. Named Storm Deductibles

    Posted by Geoffrey Gordon

    Thu, Aug 15, 2019 @ 09:40 AM


    You call the insurance company after a big nor'easter or hurricane, with a tree sitting on your house, and they tell you that you have a "wind deductible."  What's that?  

    It's a separate deductible from the one that applies to everything else to lower the cost of storms to insurance companies in wind-prone regions.  There are a few variations beyond just "wind," and we'll look at which are better (if your location limits your choices and have this provision).

    House damaged by tree-927040-edited.jpgWhen a storm hits, the distinction between Named Storm deductibles, Wind storm deductibles and Hurricane deductibles can be important. The distinction is particularly important if you live or own property in a coastal county in Massachusetts, such as Plymouth, Dukes, Barnstable, Bristol, Suffolk and Essex, because all are generally available and choosing the right one might make a difference in the cost to repair your home after a storm. 

    Here's how it works:  these deductibles are applied separately for a higher dollar amount than your standard deductible, known as “all other perils” (AOP) deductibles.  For example, if you have a $1,000 deductible for fire, theft and all other perils and you live on the coast, you may have a $2,000 or higher deductible for windstorm and hail losses.

    More common than dollar amounts however, wind deductibles are often expressed as a percentage of the coverage amount on your home. For example, a 1% wind deductible on a $300,000 home would be $3,000 and a 2% wind deductible would be $6,000.  A 5% wind deductible on a $700,000 home is $35,000!!  Here in coastal Massachusetts counties, 1%, 2% and 5% wind deductibles are common if your property is within a mile of the coast.  

    These deductibles are part of an effort by the insurance industry to limit their storm losses by having homeowners share more of the repair costs when the wind blows.  Informed property owners - that's you - can take steps to protect homes when especially vulnerable to wind damage.  After all, if you have a 5% deductible on half a million dollar house, you’ve got 25,000 good reasons to consider storm shutters, a generator, the highest quality shingles, fewer trees in the yard, and other protections. 

    If you have a wind deductible it normally will appear right on the "declarations" (first) page of your homeowner’s insurance policy.   Different insurance companies use different metrics for these specific peril deductibles. The three most common approaches are:

    1. Windstorm deductibles (the broadest, meaning it will affect the most people)  
    2. Named Storm deductibles (common) and
    3. Hurricane deductibles. 

    The broadest of these three, meaning where it will apply to the most consumer claims, is a Windstorm deductible.  These deductibles apply whenever damage is caused by wind; these include not only hurricanes and other tropical storms but also winter nor'easters and summer thunderstorms.   Any kind of wind damage will prompt this higher exposure to the owner.

    The next category is Named Storm deductibles.  To illustrate, remember the notorious “no-name" storm?  Damage from that storm would not have been subject to a higher Named Storm deductible, but would have under a Wind deductible.  The regular, smaller AOP deductible would have been used for any damage caused by the no-name storm under a Named Storm deductible.    But damage from Hurricane Irene or Hurricane Sandy, or other named storms would have invoked the Wind and/or Named Storm deductible. 

    Finally, there are the most restrictive Hurricane deductibles.  Hurricane Sandy is a good example of the distinction between Named Storm and Hurricane deductibles.  When Sandy made land fall in New Jersey she had been downgraded from a Category I hurricane to a tropical storm. Thus, the lower AOP deductible applied to folks with a Hurricane deductible. Hurricane deductibles have become less common due to the potential for political interference after the fact, as was evident with Sandy.  Some suggested that the downgrade of Hurricane Sandy was precisely announced to shield homeowners from the Hurricane deductible.   Good for consumers with that one event, but insurance carriers quantify risk precisely, and after the fact interference prompted changes for the next event.  Thus what were Hurricane deductibles have morphed into Named Storm deductibles in most coastal regions.

    Many considerations should factor in your choice of insurance companies for selecting homeowners and other property insurance.  But all else being equal, and given the option between Windstorm vs. Named Storm, choose Named Storm as it is more restrictive. Given the choice between Named Storm and Hurricane deductible, you should choose a Hurricane as it’s the least likely to be invoked.  

    For more information on the subject, check out our short but super-informative whiteboard video where we give cost examples of various deductible options near the coast.

    If you've just discovered you have a higher wind deductible than you are comfortable with, contact us at 800-649-3252We can also research better offers for you - just click the link below. 

      Coastal Insurance  eBook REQUEST A QUOTE

    Geoff Gordon

    Tags: insurance, homeowners, storm, deductible, wind, windstorm, Coastal, deductibles, named, all other perils, AOP

    Will Naming Winter Storms Affect Your Deductible?

    Posted by Gordon Atlantic Staff

    Wed, Feb 20, 2013 @ 08:10 AM

    Cover your home and car for winter storms with homeowners and auto insurance from andrew gordon incWho’s bright idea was it to name winter storms? Nemo? Really? I don’t know about you, but Nemo just doesn’t quite ring right. The Blizzard of 1978 conjures up powerful imagery of the superstorm of all winter superstorms. All I can say is our recent brush with Mother Nature will forever be the Blizzard of 2013 to me.  

    The Weather Channel apparently decided to name winter storms  in a bid to boost public awareness and coordinate response efforts. Guess I will never get use to winter storms being named after Disney characters. First, there is Nemo. What comes next?  Will a future storm be called “The Little Mermaid”?  Where will it end??

    Okay, to be fair, Nemo was not named after a Disney character, but rather from the Greek name meaning “from the valley” or “nobody” in Latin.  Or perhaps Nemo is named after Captain Nemo, aka Prince Dakkar from Twenty Thousand Leagues Under the Sea. Regardless, I still don’t see the connection with a blizzard.

    Once possible outcome of this seemingly innocuous public relations move to name winter storms is the possibility that insurance companies could apply a higher named storm deductible for damage from a named storm. While I have not seen this happen, it’s a possibility if a carrier carries policy wording that applies a higher deductible for damage from a storm which is named by the National Weather Service or any other recognized meteorological authority. The question remains if the Weather Channel is a recognized meteorological authority by insurers.

    The Weather Channel apparently decided to name winter storms  in a bid to boost public awareness and coordinate response efforts. The Weather Channel announced that in addition to providing information about significant winter storms by referring to them by name, the name itself will make communication and information sharing in the constantly expanding world of social media much easier. As an example, Twitter hash tagging a storm (#Nemo) based on its name provides a one-stop shop to exchange all of the latest information on the impending high-impact weather system.

    The naming of winter storms may have been a PR move by The Weather Channel but the naming could have broader implications within the insurance industry. The intent of a named storm deductible was to apply to tropical storms nearing hurricane strength. #Nemo and his successors open the door for some insurers to apply a higher deductible because now there is a name attached to a blizzard.

    Fortunately, we have not seen a change in deductible practices with any of our carriers as result of winter storm naming. I do not foresee this changing but it’s an interesting twist to the named storm debate. Regardless, our most recent storm will always be #Blizzard2013 to me.

    If you have more insurance questions, feel free to contact us here at Gordon Insurance by clicking the button below.

    INSURANCE QUESTION?  Winter Storm Center

    Tags: winter, insurance, storms, changes, nemo, blizzard, deductible, named

    Insurance Near the Massachusetts Coast

    Posted by Geoffrey Gordon

    Wed, Jun 20, 2012 @ 09:03 AM

    Living on the coast of New England has always had its advantages: proximity to the beaches, the memorable sunrises/sunsets, and cool ocean breezes in the summer. Offsetting these advantages, however, are new challenges in insuring a home wherever these breezes keep you cool during the dog days of summer.

    Why do they cost more?

    Trust Andrew Gordon Inc Insurance Norwell MA with your coastal home insurance for the best coverage

    Insurance companies’ concern with coastal homes is not about floods (flood damage is excluded, and needs to be insured separately). It’s the wind.  Wind can knock down trees, phone and electrical lines, and damage roofs, exposing the rest of the house to rainwater and related problems. Wind poses a “severity” concern too, since one storm can generate large losses for many companies throughout a broad region. Not surprisingly, reinsurers (who provide catastrophic insurance for insurance companies) are demanding new restrictions on how coastal property owners participate in their own losses.

    How are insurance companies dealing with this?

    To moderate severity geographical concentrations, and to provide incentives to homeowners to protect against wind damage, most companies are imposing mandatory wind deductibles, near the coast. These are distinct and separate from your standard deductible. There are two categories, and the distinction can be important: “Named Storm” deductibles apply only to claims arising from a Named Storm (i.e. Class 3+ Tropical Storms & Hurricanes). A broader “Wind/Hail” deductible, applies to any wind/hail loss. When given the choice, a Named Storm deductible is preferred, simply because it won’t apply as often, such as on damage from winter nor’easters or summer thunderstorms… or the notorious “No-Name” perfect storm.

    How much is this costing me?

    These new deductibles are usually expressed as a percentage of your dwelling (house) amount, and range from 1% to 5% depending on location and a company’s existing exposure. For example, a 2% wind deductible on a home insured for $250,000 translates to $5,000, a significant amount to “self-insure”. Distances generally dictate the amount you share: less than 1000 feet from the shore (3% – 5% wind deductibles common), 1000’ —2500’ (2% common), 2500’ to 1 mile (“named storm” deductibles become available), and 1– 5 miles (more markets, more choices become available).

    Can you avoid a wind deductible if you’re within these ranges? 

    Sometimes. Contact Andrew Gordon Insurance for home insurance solutions that fit your budget and your tolerance for risk at our website. Get a coastal home insurance ebook here

    Home Quote Request Coastal Insurance  eBook  

    Geoff Gordon

    Tags: beach, home, summer, insurance, coast, homeowners, Flood, deductible, wind, Coastal

    Understanding Your Auto Insurance Policy

    Posted by Val Feeney

    Thu, Dec 01, 2011 @ 04:17 PM

     A Breakdown of Each Coverage on Your Policy

    Chances are if you look at your Massachusetts auto policy and don’t understand what the coverage amounts mean, you are not alone.  However, you should familiarize yourself with your coverage so you can determine if you have enough financial protection.  So get out your policy and follow along as I describe what each coverage means below.

    Understand your auto insurance options to cover your vehicle with Andrew Gordon Inc Norwell MAPart 1. Bodily Injury to Others. 

    This pays for medical expenses and other damages to anyone injured or killed by your car.  This required amount is $20,000 per person and $40,000 per accident (max).  Meaning, the total amount paid out to the people you hit is $40,000 combined ($20,000 for 1 person, $10,000 for 2 other people, or $10,000 for 4 people, etc).  This only covers accidents in Massachusetts.

    Part 2. Personal Injury Protection (PIP).

    Pays up to $8,000 in medical expenses for you or anyone who is driving your car (legally) during an accident.  It also covers any passengers or pedestrians for medical expenses once the individual’s own health care expenses reach $2,000.   

    Part 3. Bodily Injury Caused by an Uninsured Auto.

    Protects the driver and passengers (unless covered by their own auto policy) against medical expenses caused by an uninsured or unidentified driver.  This covers any “hit & run.”  The minimum limit required is $20,000 per person and $40,000 per accident.  Recommended Amount: $100,000/$300,000

    Part 4. Damage to Someone Else’s Property. 

    This amount pays for damage you cause to another person’s property such as an automobile or building.  The minimum limit is $5,000.  Recommended Amount: $100,000

    Part 5. Optional Bodily Injury to Others.

    This optional amount is added onto the Part 1 minimum of 20K/40K to extend your liability against injury to others.  This coverage also protects you against damages suffered by guests in your car during the accident.  This covers accidents in the entire United States and Canada.  Chances are, if you get into a serious accident, you will owe more than $20,000 per person and $40,000 total, leaving you on the hook for the difference.  Recommended Amount: $250,000/$500,000 or $100,000/$300,000

    Part 6. Medical Payments. 

    Medical expenses for you and your passengers over and above the amounts covered by Part 2, no matter who is at fault in the accident.  Recommended Amount: $5,000

    Protect your automobile from a car accident by driving safely and understand your auto ins policy with Gordon Insurance Norwell MAPart 7. Collision.

    Collision coverage pays for the damages to your car when involved in an accident, regardless of fault.  You may need to pay the deductible. Recommended Amount: $500

    Selecting Your Deductible.

     The deductible set under Part 7 and Part 9 is your choice.  The standard deductible is $500.  You can save on your premium by selecting a $1,000 deductible.  This is the amount you will have to pay in the event of an accident which is your fault or if the other driver is unidentified (“hit & run”).

    Waiver of Deductible. 

    Having a “Waiver of deductible” means that you will not need to pay the deductible if the accident is caused by another driver that is identified. 

    Part 8. Limited Collision.  

    This coverage is for people who do not wish to carry full Collision coverage, Part 7, but still want to be covered if they are hit by an identified driver who was at fault.  If you are at fault, you will not be covered.  Recommended Amount: Get full Part 7 Collision

    Part 9. Comprehensive.  

    Pays for damage to your vehicle resulting from non-collision events such as theft, fire, striking an animal, or falling tree damage.  You will be responsible for the deductible.  Recommended Amount: $500

    Part 10. Substitute Transportation. 

    Reimbursement for a car rental or transportation while your vehicle is being repaired (after a breakdown or accident).  You will receive a daily stipend and total stipend that cannot be exceeded.  Options are $15 a day up to $450 (30/900. 45/1350. 1000/3000).  Recommended Amount: 15/450 if you have AAA.  30/900 if you do not have AAA. 

    Part 11. Towing and Labor.  

    Pays up to a certain amount to get your car towed from the accident/breakdown scene or fixed at the scene (parts not included) so it runs again.  Options are $50, $100, $150.  Recommended Amount: $100

    Part 12. Bodily Injury Caused by an Underinsured Auto.

    Protects the driver and passengers (unless covered by their own auto policy) against medical expenses caused by an underinsured driver.  The accident must be caused by someone without enough bodily injury coverages (Part 1 & Part 5). Recommended Amount: $100,000/$300,000

    If you do not have any of the recommended coverage amounts above, you are putting yourself at financial risk every time you get behind the wheel.  It may be time to have your policy quoted with the proper amounts.  Send us a copy of your policy today, and we will quote it with several different carriers, ensuring you get the best product at the best price.  Go to our website www.agordon.com for more insurance resources. Learn more about your auto insurance options here.

    Read another staff member's article Property Damage for Auto Insurance: Should I Increase My Limit?

      INSURANCE QUESTION?  

    Val Feeney

    Tags: auto, policy, insurance, coverage, accident, massachusetts, car, crash, collision, comprehensive, deductible, medical expenses, bodily injury, property damage, transportation, uninsured

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