What is Windstorm Hazard

Windstorm hazard refers to the risk that a property will sustain losses due to strong winds. Windstorm insurance, or storm insurance policy or endorsement, generally covers losses resulting from excessive wind and/or hail. Most homeowner's insurance policies exclude coverage for losses arising from windstorms, and if coverage is desired, a separate windstorm insurance policy or endorsement must be purchased.

BREAKING DOWN Windstorm Hazard

Following several legal cases involving years of appeals after hurricanes Katrina and Rita, it became evident that consumers required better education regarding the need for separate flood and wind peril policies. Insurance companies considered adding the wind peril to flood insurance policies, adding the flood peril to standard homeowners' policies, making improvements to the National Flood Insurance Program (NFIP) and requiring stricter building codes in coastal and floodplain regions. Currently, new and renewal homeowner's policy notifications highlight the absence of flood coverage in standard policies and the need to consider this type of coverage.

The Importance of Windstorm Hazard and Flood Insurance

Only with windstorm hazard and flood insurance would a homeowner likely be able to remain financially whole if their home was unlucky enough to be in the path of a major hurricane. After hurricane Katrina, the insurance industry learned a great deal about risk modeling around the windstorm hazard. Prior to Katrina, storm surge modeling essentially assumed the height of the storm surge to be a function of the maximum sustained winds. Katrina proved other factors were in play. Much was learned about how the physical size of the hurricane can affect the storm surge. Hurricane Camille’s winds extended 60 miles from the storm center, while Katrina’s extended 120 miles.

The larger size of Katrina was a major factor in pushing more water onto the shore. In addition, Katrina's winds caused substantial damage to structures that experienced hurricane force winds from Katrina, despite the fact that the recorded wind speeds were less than the wind design speeds. Most of the wind damage occurred to the building envelope, including roof covering, walls and windows. If the building codes had been strictly followed, the wind damage would have been greatly reduced. Poor workmanship and a lack of knowledge were the primary culprits. Today, the Gulf Coast is in a better position to withstand the effects of a hurricane due to better education, improved building codes and increased third party inspection. While Katrina insurance settlements were high, many insureds were surprised to find out they were not covered for storm surge losses because their coverage lacked windstorm hazard coverage.