As insurers face rising costs from severe weather, homeowners insurance policies are being adjusted to limit their financial exposure, particularly concerning storm and wind damage.
Major changes include higher, percentage-based deductibles; reduced coverage for older roofs; and limitations on coverage in high-risk regions.

Higher deductibles for wind and hail

Insurance companies are increasingly shifting from fixed-dollar deductibles to higher, percentage-based deductibles specifically for wind and hail damage.
  • How it works: This deductible is a percentage—typically 1% to 5%—of your home’s total insured value. If your house is insured for $500,000, a 2% wind and hail deductible means you must pay the first $10,000 of a claim yourself.
  • Why it’s changing: As catastrophic weather events and associated claims become more frequent and expensive, insurers are transferring more of the initial financial burden to the policyholder.
  • Compare your policy: Homeowners should compare their new wind/hail deductible to their standard “all peril” deductible, as the storm-specific amount can be significantly higher. 

Reduced coverage for older roofs

Insurers are becoming stricter about the age and condition of a roof when determining coverage for wind and hail damage.
  • Shift to Actual Cash Value (ACV): Policies increasingly offer Actual Cash Value (ACV) for older roofs rather than Replacement Cost Value (RCV). With ACV, the payout is based on the roof’s depreciated value at the time of the claim, leaving the homeowner responsible for the difference. Some companies apply this to roofs as young as 10 to 15 years old.
  • Cosmetic damage exclusions: Some policies exclude coverage for cosmetic damage caused by hail, such as dents in a metal roof, even if it does not affect the roof’s function.
  • Higher premiums and inspections: To manage risk, some carriers are requiring more frequent inspections and charging higher premiums for homes with older roofs. 

Limits on coverage in high-risk areas

In states that have a high frequency of catastrophic weather, some insurers are limiting or dropping coverage entirely.
  • Withdrawal from high-risk states: Insurance companies, including major carriers like State Farm and Allstate, have stopped writing new policies in some states with high risks from wildfires, hurricanes, and severe storms.
  • Carrier insolvency: In hurricane-prone areas, some smaller insurers have become insolvent after recent hurricanes, leaving homeowners with fewer options.
  • Restricting coverage: Other insurers are restricting coverage by increasing deductibles, capping payouts, or even excluding certain perils like wind and fire. 

What this means for homeowners

Given these market changes, it is essential for homeowners to be proactive.
  • Read your policy carefully: Do not simply compare premiums at renewal. Review your policy’s fine print for specific deductibles and coverage limits related to wind, hail, and roof damage.
  • Evaluate out-of-pocket costs: Understand how a percentage deductible could affect your finances if you file a claim. For a $400,000 home with a 2% deductible, you will pay the first $8,000 of damage.
  • Assess your roof’s condition: With the shift to ACV for older roofs, consider the implications for your potential claim payout. Regular roof maintenance can extend its life and may be required to maintain coverage.
  • Consider mitigation efforts: Making upgrades to your home, such as installing storm shutters or a new roof with impact-resistant materials, may help you secure better coverage and even qualify for discounts.