When a hurricane strikes, it is comforting to know that your home is insured. It’s equally assuring to have an understanding of just how your policy works. Throughout Florida and the entire Gulf Coast, percentage-based hurricane deductibles became the standard following the intensely active 2004-2005 storm seasons.
The percentage of the insurable value of your home deductible is known as a hurricane deductible (it can also be a Wind & Hail Deductible depending on the policy) and it’s something that all Florida homeowners should understand.
What Is a Hurricane Deductible?
Just about every insurance policy has a deductible—the portion of your claim that you are responsible for paying out of pocket before your insurance coverage will kick in.
Here in Florida, most homeowners’ policies have at least two deductibles, which are usually different amounts:
- A hurricane deductible for hurricane claims
- An All Other Perils (AOP) deductible for whatever else your policy covers.
Your hurricane deductible can sometimes be a flat dollar amount, but more often, it’s a percentage of your dwelling coverage, such as 2, 5, or 10%.
Why Do I Have Two Deductibles?
Hurricane deductibles were first introduced after Hurricane Andrew hit Florida in 1992 and became more common in 2004 and 2005 after storms like Charley, Frances, Jeanne, and Katrina.
Having two deductibles was seen as a way to cut down on raising home insurance rates and to help ensure that insurers could pay claims and remain afloat amidst more and more natural disasters. Some policies have wind/hail deductibles that apply for damage caused by windstorm (whether a hurricane or just an afternoon thunderstorm) or hail. They are most often percentage-based just like hurricane/named storm deductibles.
How Is a Hurricane Deductible Calculated?
Unlike your standard flat deductible on your homeowner’s insurance policy, hurricane deductibles in Florida are usually calculated as a percentage of your home’s insured value. This means the amount you’re responsible for paying depends on how much coverage you have and not the cost of the damage to the home.
For example, if your home is insured for $300,000 and your policy has a 2% hurricane deductible, you’d need to pay $6,000 before your insurance company would begin covering the repair costs. A 5% deductible on the same home would mean coming up with $15,000.
It’s easy to underestimate how much these deductibles cost, especially when you’re trying to make storm repairs and replace damaged items at the same time. Knowing your deductible ahead of time helps you plan accordingly and avoid the sticker shop after a storm.
How Do Hurricane Deductibles Work?
As is typical with insurance, there are rules about how to use your hurricane deductible. For example, the damage would need to occur in a specific period of time to be considered “hurricane damage.”
The clock starts ticking when a hurricane warning is issued for any part of Florida by the National Hurricane Center of the National Weather Service and ends 72 hours after the last hurricane watch/warning is terminated. These guidelines still apply, even if the hurricane is downgraded to a tropical storm.
In Florida, your hurricane deductible applies to any and all storms that occur in the same calendar year, as long as you are insured with the same insurance company (or group of companies).
This means that in a multiple storm season, there is only ONE hurricane deductible applied. Unlike your all other perils deductible (AOP), the hurricane deductible does not reset event by event.
Can I Lower My Hurricane Deductible?
Yes, in many cases, you can lower your hurricane deductible, but it often comes with a tradeoff. Choosing a lower deductible usually means paying higher premiums. On the flip side, a higher deductible can reduce your monthly costs, but it also means you’ll be responsible for more out-of-pocket expenses if disaster strikes.
That’s why it’s so important to strike the right balance between affordability and preparedness. If covering a large deductible all at once would put your finances in a bind, it may be worth exploring policies with lower deductible options, even if the premiums are a bit more.
What Hurricane Insurance Do I Need?
Hurricane coverage is typically covered under most types of home insurance policies, but when hurricane season hits, standard homeowners insurance isn’t always enough.
For example, while most home insurance policies cover water damage, they do not cover flood damage. If you want coverage for rising flood waters and storm surge (and you should!), you’ll need to purchase a policy through the National Flood Insurance Program.
The good news is that flood insurance tends to be extremely affordable, especially when you consider the added peace of mind it will bring you!
Don’t Let Your Deductible Catch You Off Guard
Buying sandbags and bottled water shouldn’t be the only things on your hurricane preparedness checklist.
You should also make sure you have enough on-hand to pay for your hurricane deductible in the event of a disaster. (To find out what your hurricane deductible is, check the Declarations page of your homeowners insurance policy or contact your local independent insurance agent.)
Your hurricane deductible may be higher than your AOP, but that doesn’t mean you are stuck paying through the nose for decent coverage. As an independent insurance agency, Harry Levine Insurance is able to gather quotes from a wide variety of trustworthy insurers. This allows us to build customized coverage that works best for your budget and—most importantly—your needs.
Contact us today for a free quote!
