Super storm Sandy spotlights home insurance

People whose homes were damaged by super storm Sandy will soon find out whether or not they have enough and the right kind of insurance to rebuild.

In other recent disasters, one-half to two-thirds of homeowners discovered after the fact that they were underinsured, often by hundreds of thousands of dollars, according to surveys by consumer group United Policyholders.

After every major disaster, it seems, insurance companies find ways to limit coverage, and if you don't read the fine print in your policy, you may be unaware of so-called exclusions.

Although most policies have long excluded damage arising from war, after the 9/11 attacks some companies began excluding coverage for damage caused by terrorism.

After Hurricane Andrew in 1992, companies began inserting hurricane deductibles into standard homeowner policies. Instead of a flat amount such as $500 or $1,000, the deductible is a percentage of the coverage limit, generally ranging from 2 to 5 percent, depending on distance from the coast.

If the home is insured for $300,000 with a 5 percent hurricane deductible, the homeowner must pay the first $15,000 in damages resulting from high winds or a named hurricane, depending on the trigger named in the policy. (Percentage deductibles are also typical in earthquake policies.)

Sandy was no longer a named hurricane when it reached shore, which will spare many East Coast homeowners the steeper deductible, although they will still owe the regular deductible for damage caused by wind.

Homeowners insurance does not cover flooding and storm surges, and those who failed to buy flood insurance will have to foot their own repair bills.

As always, the best time to find out what's in your policy is before a disaster, not after.