As part of a U.S. Integrated Ocean Observing System (IOOS) funded Coastal and Ocean Modeling Testbed (COMT), hindcasts of waves and storm surge for 2017 Hurricanes Irma and Maria are examined and compared to wave and water level gauge data in the vicinity of Puerto Rico and the U.S. Virgin Islands. The region is characterized by adjacent deep ocean water, narrow shelves, and coral reef systems providing coastal protection. The storm physics are analyzed using an unstructured grid third‐generation wave circulation coupled modeling system (ADCIRC+SWAN) with respect to tides, winds, atmospheric pressure, waves, and wave radiation stress‐induced setup. The water level response is generally dominated by the pressure deficit of the hurricanes. Wind‐driven surge is important over the shallow shelf to the east of Puerto Rico and wave‐induced setup becomes significant at locations in close proximity to the coastline. Contrary to conditions along the Gulf of Mexico shelf, geostrophically induced setup is negligible. Characteristics from a range of meteorological forcing models are assessed, and the associated errors in the hydrodynamic response are quantified. A data‐assimilated tropical planetary boundary model leads to the smallest atmospheric pressure, water level and wave property errors across both storms. Through comparisons between ADCIRC+SWAN and SLOSH‐FW (a structured grid first‐generation wave circulation coupled model), it is shown that the response to atmospheric forcing is similar; however, nearshore wave setup is smaller in SLOSH‐FW due to its coarser resolution here. Further, in addition to erroneous wind‐driven surge through depth limiting over the open ocean, numerical oscillations in the water level time series develop in SLOSH‐FW likely due to its small domain size.