The hurdles of hurricane insurance

Now that the worst of Hurricane Sandy has passed, it's no doubt that businesses and homeowners are starting to think about their losses and what their insurance plans will cover. Unfortunately, that may force them to "weather" even more hardships, as they may have to pay a bigger share of the bill to cover hurricane repairs.

It was a hard lesson first learned and brought to the media spotlight when Hurricane Katrina hit seven years ago. As with many hurricanes, flooding was the main cause of damage, but many people don't know (until it's too late) that flooding may not be covered by their regular homeowner's policy.

According to Insurance Information Institute, in the event of hurricane damage, many insurers now require owners to pay a percentage of the replacement value, rather than a traditional deductible. Typical percentages range from one to five percent of the property's value. For example, if your home is insured for $500,000 and you have a 5 percent hurricane deductible, you'd get no coverage for the first $25,000 in damage. Also, in some cases, the deductible percentage can be even larger.

The owner's responsibilities are spelled out on the declaration page of the insurance policy. Additionally, any hurricane damage from water, not wind and rain, is covered by flood insurance, which must be purchased separately through the federally run National Flood Insurance Program.

There is normally a 30-day waiting period before newly purchased flood insurance goes into effect, so homeowners who lack coverage now are out of luck when it comes to Hurricane Sandy.

Articles from The Washington Post and The Christian Science Monitor contributed to this article.