Massive wind damage from a powerful derecho that struck Houston and surrounding areas on May 16, 2024, and revealed critical gaps in homeowners’ insurance coverage, leaving many residents struggling to repair their properties.
“Many clients discover they have insurance policies they think cover wind or hurricane damage, but when their roof gets damaged and water starts coming in, they’re shocked to learn they’re only covered for half the repairs,” said Nishi Kothari, an attorney specializing in insurance litigation.
Insurance experts point to three major oversights putting Houston-area homeowners at financial risk.
1. Separate Wind and Hail Coverage Required
Many homeowners don’t realize that wind and hail coverage often requires a separate policy, particularly in coastal regions of Texas. Standard homeowners insurance may not automatically include this protection.
“You might have home insurance and windstorm insurance separate from that home insurance policy,” explained Jessica Fuentes, an insurance broker with Brazos Insurance. “Residents closer to the coastal region of Texas need to double-check their windstorm and hail coverage.”
2. Understanding Replacement Cost vs. Actual Cash Value
The difference between replacement cost and actual cash value coverage can mean thousands of dollars in out-of-pocket expenses for homeowners.
Fuentes illustrated this gap with a typical scenario: “If you have a $5,000 deductible and $10,000 in damage, under replacement cost coverage, you’re in better shape. But with actual cash value coverage, if they determine the depreciated value is only $6,000, and you have that $5,000 deductible, you’ll only receive $1,000 for $10,000 worth of damage.”
3. Hidden Costs in Percentage-Based Deductibles
Insurance agents often quote deductibles as percentages, obscuring the actual dollar amount homeowners must pay before coverage kicks in.
“What sounds like a small percentage can translate to a substantial sum,” Fuentes warned. “On a $500,000 home, a 5% deductible means you’re responsible for the first $25,000 in damages.”
Taking Action Before the Next Storm
Insurance experts recommend homeowners:
- Review policies specifically for wind and hail coverage
- Confirm whether coverage provides replacement cost or actual cash value
- Calculate exact dollar amounts of percentage-based deductibles
- Consider updating policies before the next severe weather event
The May derecho, which produced widespread destruction across the Houston metropolitan area, served as a wake-up call for many residents about the importance of understanding their insurance coverage details.
Make sure you talk to your home insurance professional in the next few weeks, before the 2025 hurricane season begins.
