Insurance rates could rise in NJ as hurricane season ramps up

🌧 As hurricane season ramps up, experts expect “above normal activity”

🌧 That means insurance rates could rise in hurricane-prone regions in NJ

🌧 One expert offers ways to save some money on insurance rates

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The National Oceanic and Atmospheric Administration said it expects an 85% chance of “above normal” activity this hurricane season, which spans from June 1-Nov. 30.

Insurance rates have gone up dramatically in hurricane-prone regions across the country, and in New Jersey, but there are things residents can do to lower costs.

Hurricane Costs in New Jersey

It used to be that hurricanes mostly affected the coastal regions of New Jersey, but not anymore. Now, all of the Garden State is susceptible to hurricane damage from its high winds, tidal floodings, and storm surges, says Christine O’Brien, president of The Insurance Council of New Jersey.

Take Superstorm Sandy in 2012. New Jersey alone experienced $36 billion in damage. Of that, there were 470,000 total insurance claims, including 337,400 homeowners and more than 56,000 auto claims, she said.

Fast forward to 2021 when Hurricane Ida caused about $2.02 billion in damage in New Jersey. However, Somerset County alone suffered nearly $165 million in losses and 13,228 insurance claims were made. In Middlesex County, 14,084 claims were filed for about $155 million in damages.

Homeowners and Renters Insurance

Since all of New Jersey can be affected by hurricane damage, O’Brien said it’s important for everyone to know what their policy covers, in the event of a storm. Know if you’re paying for replacement cost coverage or actual cash value coverage.

Replacement cost coverage covers the full cost of repairing an item or buying a new one. The actual cash value coverage covers the cost of an item less the depreciation, she said.
Renters insurance will cover the contents of what was damaged inside a home, following a storm.

“Most likely your policy also offers what is called “Additional Living Expenses” or A-L-E, and that coverage pays for your hotel bills, your meals, and other costs associated with the very unfortunate circumstance of being misplaced from your home during a hurricane or other serious weather event,” O’Brien said.

When applying for homeowner’s or renter’s insurance, keep in mind you cannot get insurance after an event.

“Make sure that any insurance you want to buy now, you know exactly what the need is, and talk to an agent about that,” she said.

Chances are you will be able to find coverage in New Jersey for homes or renters because there are more than 131 companies writing homeowner’s insurance in the state, O’Brien added.

Saving Money

Be sure to read the declaration page of your insurance policy which tells you what is included and excluded from the policy.

To help save some money, O’Brien suggested revisiting the policy and knowing what level of coverage you can afford yourself. Try to bundle insurance needs. Perhaps, afford yourself a higher deductible that will lower the premium in the short term.

Do an inventory of your home and property. Make sure that the roof, shingles, and siding are in relatively good condition. Secure the gutters.

“If you also upgrade your electrical or plumbing and heating systems, notify your home insurer. Let them know that you’ve made those improvements to the property and that most likely will result in some cost savings on your premiums,” O’Brien said.

Flood Insurance

It’s a bummer but homeowner’s and renter’s insurance in New Jersey does not cover flood. In New Jersey, there are over 400 municipalities that are in flood zones, according to FEMA and The National Flood Insurance Policy Program (NFIP).

So, with over two-thirds of New Jersey, at some level in a flood zone, it is recommended that residents buy flood coverage.

Flood coverage can be purchased through the NFIP or through the more than 21 private insurers in New Jersey that sell private flood coverage, O’Brien said.

The good news is that New Jersey is the 6th highest state that purchases flood insurance. The bad news is that as of June 2023, there are only 206,000 New Jersey policies in the NFIP program. That includes residential and commercial businesses.

“That means 90 percent of the properties in New Jersey are not insured for flood,” she said.

O’Brien said she is surprised by these numbers because after Superstorm Sandy, the one lesson learned statewide is that flood is not included in our homeowner’s insurance policy.

“Perhaps now that we’re seeing more damaging impacts by severe weather events, not just along the coast, but on our inlands and in the local waterways, hopefully people will pay more attention about what it means to better protect their property and afford themselves the flood insurance,” O’Brien said.

Car Damage

O’Brien also wants to remind New Jersey, residents, that if their car is damaged in a hurricane or other weather-related event, and they have comprehensive coverage as part of their policy, that coverage will pay for damage to their vehicle.

If a tree falls on the car, if there is corrosion from salt water, or if the wind has tossed an item on top of your car that caused damage, the comprehensive portion of your auto insurance policy pays for that damage.

For more information about dealing with a hurricane, visit here.

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