One important danger that looms over the heads of homeowners living in coastal parts of the US is the danger of hurricanes. Hurricanes are powerful storms that can wreak havoc and cause tremendous damage, devastation and death on a community.
Hence, it is compulsory for homeowners living in this area to get their homes insured to avoid any financial crisis. The most common homeowners insurance policy used to cover damages inflicted due to hurricanes and other natural disasters is called a homeowners-3 policy or HO-3 policy.
Mentioned below are certain important points that homeowners must consider while buying a HO-3 policy.
Extended Replacement Cost Coverage: This is an important aspect to be remembered by homeowners facing the risk of hurricane. After the occurrence of a catastrophe like hurricane, cost of construction materials and labor becomes increasingly scarce and expensive. An extended replacement cost coverage policy helps in covering any such rising expenses.
Hurricane Deductibles: No insurance company provides 100 percent insurance coverage when there is a certainty of a disaster. Hence, deductibles are compulsory for homeowners. The percentage of deductible to be paid varies from state to state. For example, 70 percent of homeowners in Florida have a 2 percent deductible amount applicable to their hurricane coverage. Homeowners should plan in advance about saving money for deductibles in case any disaster occurs.
Flood Coverage: There are certain exclusions in a HO-3 policy. This policy does not provide insurance on the damages caused due to hurricane flooding. This coverage must be purchased as a separate policy from the National Flood Insurance Program initiated by the federal government.