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Major Hurricane Season Predicted; Insurers Aren’t Taking Chances

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Storm Irene caused widespread damage in 2011. The insurance industry has implemented changes since then. Credit: Jan Ellen Spiegel / CT Mirror
Jan Ellen Spiegel / CT Mirror

Unless a ton of climate and weather scientists are wrong, the U.S. could be in for the worst Atlantic hurricane season ever. “This season is looking to be an extraordinary one,” said Rick Spinrad, administrator of the National Oceanic and Atmospheric Administration, Thursday morning at a briefing to announce NOAA’s predictions for the upcoming hurricane season, which starts on June 1 and runs through Nov. 30.

NOAA is predicting an 85% chance of an above-normal season, with 17 to 25 named storms, eight to 13 hurricanes and four to seven major hurricanes, which are those that have sustained winds of at least 111 mph — categories 3, 4 and 5. “The forecast for named storms, hurricanes and major hurricanes is the highest NOAA has ever issued for the May outlook,” Spinrad said.

image-20240620132908-1Credit: Courtesy: NOAA

The forecast is in keeping with several earlier forecasts, including one issued by Colorado State University. Nearly two months ago, CSU predicted a very active season with 23 named storms, 11 to become hurricanes and five major hurricanes. It was the highest prediction for hurricanes that CSU has ever issued in its April outlook, which began in 1995.

Climate change is part of the culprit. It has caused unprecedented warmth in the oceans, which means there is more fuel for storms. Matthew Rosencrans, NOAA’s lead hurricane forecaster, said sea surface temperatures in the main storm development area are where they would normally be in August — that’s 2 to 3.5 Fahrenheit degrees above normal for this time of year. Another factor is the cyclical weather pattern known as La Niña, which is expected in late summer. It is conducive to more active hurricane seasons because its low wind shear conditions allow storms to stay intact. Forecasters are also seeing active African monsoons. The warm water just makes everything worse. “It’s really the confluence of factors,” Rosencrans said.

It could be not a single storm hits land anywhere, never mind this part of the Atlantic basin. But as the longstanding mantra goes, repeated multiple times during NOAA’s announcement: it only takes one. Witness 1992, predicted to be a very mild hurricane year. And indeed that was the case, with fewer than a handful of hurricanes. But one of them was Andrew. To this day it remains among the worst hurricanes to strike the U.S., devastating south Florida and parts of the Gulf coast.

As many in Connecticut’s shoreline communities have already discovered, or may discover soon, insurance companies are not taking chances. Homeowners insurance rates are increasing — by double digits year-over-year, in some cases. And what’s known as a “hurricane deductible,” once a rarity, is now close to ubiquitous. To be clear, some of this is a result of the continuing COVID legacy of inflation and supply chain difficulties. Replacement costs for homes are just higher than they used to be. But a great deal, if not most of it, is a function of the massive payouts insurance companies have faced from natural disasters that are more frequent and extreme, courtesy of climate change. In the west, it’s wildfires. On the East and Gulf Coasts, it’s storms. Understanding what an insurance company does or doesn’t cover, what Connecticut allows or requires it to cover, and the minefields that may be all over insurance policies can be nothing short of impenetrable.

Here’s what to know.

Homeowners insurance is not flood insurance. If wind from a hurricane or any other kind of storm blows pieces of your house off or dumps a tree on your roof causing damage, homeowners insurance should cover it (at least after the deductible). If rain from that same storm or hurricane floods and wrecks your ground floor, homeowners insurance will not cover it. You’d need flood insurance, which is required in many, but not all, cases. On the other hand, if the tree that lands on your roof makes a big hole and rain comes pouring through the hole, that should be covered by homeowners insurance.

How a hurricane deductible works. Insurance policies typically have a deductible, which is the amount you have to pay off the top before insurance starts paying. It is typically a flat amount of money. A hurricane deductible is the same in that it’s the amount you have to pay off the top, but it’s different in that the amount is a percentage of the value of the structure. So if your homeowners policy values your home at $500,000, a 5% hurricane deductible means you would have to pay $25,000 out of pocket before insurance would cover anything. A 2% deductible would mean you’d have to pay $10,000. To be clear, the deductible is based on the value of the dwelling, not on the cost of the repair. If a hurricane wrecks your roof and the cost of repair is $20,000 and your deductible is $25,000, you’re going to have to pay for the whole thing. The benefit of a hurricane deductible is that the overall cost of the insurance policy stays lower.

Hurricane deductibles can be used only in parts of Connecticut. Insurance is regulated by states, so the rules in Connecticut most likely will not be the same everywhere.Hurricane deductibles are only allowed in coastal area communities — the 24 that border Long Island Sound, plus another nine that are close: North Branford, Orange, Essex, Deep River, Chester, Killingworth, North Stonington, Ledyard and Lyme. For homes within 2,600 feet of the shoreline as the crow flies — that’s just about a half-mile — companies may impose a hurricane deductible up to 5%. Beyond that distance within those communities, they can only go up to 2%. In each case, they can go to a lower percentage but not a higher one.

In some policy renewal cases for homes more than 2,600 feet from the coast, the use of already-existing storm shutters or other mitigation such as impact-resistant glass can nullify a hurricane deductible requirement.