What is a Hurricane Deductible?

Your Hurricane Deductible is important to know.  With the consistent threat of hurricanes during the summer, homeowners need to prepare. We have homeowners’ checklists and hurricane preparation tips that we can use for reference to make sure that you prepare correctly. One aspect that we also need to be ready for is the deductible amounts that homeowners would need to cover should their home sustain hurricane damage. Depending on the coverage you may have on your home, the cost of your deductible can be a hefty amount.

A hurricane deductible works the same as deductibles you may have under other policies. Whether it is a health, auto policy, a deductible is the amount that you are required to pay for before any insurance benefits kick in. Homeowners policies typically have different types of deductibles. A homeowner would cover the deductible amount under their standard portion of a policy for claims related to fire, vandalism, and non-hurricane related wind or hail damage. The hurricane deductible is the amount the homeowner would owe when needing to claim damages caused directly from the wind as a result of a hurricane. That would allow for a hurricane deductible to be applicable. The storm must be declared a hurricane by the National Weather Service or be a named storm.

When is the hurricane deductible applicable?

Damage that is caused by wind during particular weather conditions or timeframe will trigger your hurricane deductible. A hurricane is a cyclone with winds upwards of 74 miles per hour, which included rain, thunder, and lightning. That is when your hurricane deductible would be applicable. The timing of when a hurricane is named or makes landfall is essential. It can factor when a hurricane deductible is triggered. Suppose the damage occurs within 24 hours before the storm is named. Or up to 72 hours after the hurricane is downgraded. The hurricane deductible would still be applicable under those situations.

States and different insurance providers will have different requirements when it pertains to hurricane deductible requirements. Homeowners should get clarification from their insurance provider on what meets the requirements in having the hurricane deductible apply.

For Florida, hurricane deductibles apply for windstorm losses that occur because the National Weather Service declares a hurricane or if there is a hurricane watch or warning in any part of the state. The rule remains in effect up to 72 hours after the warning ends. The timing of when storms get downgraded can also have a significant impact on how much homeowners face in out of pocket expenses. As an example, a tropical storm hit an area that was expecting to be hit by a hurricane. That could mean a substantial out of pocket savings for the homeowner. The reason why is most hurricane deductibles are a percentage of the amount of coverage you have on your home. Therefore, if you have $300,000’ worth of coverage and your hurricane deductible is 3%, you would be responsible for $9,000 before your coverage took over.

Meanwhile, if you have a standard claim for wind or hail damage, your deductible maybe $500 or 1000 dollars, which is a lot less than having to come up with 9,000 dollars. Keep in mind that neither hurricane nor standard wind and hail coverage can cover damages from storm surge. A homeowner would need to have proper flood coverage to get coverage from damages sustained due to a storm surge.

What are the amounts of Hurricane deductibles?

 As mentioned above, hurricane deductibles are a percentage of the amount of coverage you have on your home. The amount of deductible percentages range from 1 to 10 percent. Homeowners need to plan accordingly to make sure they can meet the deductible requirements when filing a hurricane claim. Similar to our example above, if you have $500,000 worth of coverage on your home and have a 2% hurricane deductible (which is about the norm in Florida), that is 10,000 dollars, you would be responsible for out of pocket for any hurricane damage. After that, your policy will take over the rest within policy limits.

Choosing the correct deductible amount

The amount of damage sustained due to a hurricane is generally significant. While coming up with $10,000 to cover the deductible is nothing to laugh about, it could be a drop in the bucket compared to the amount you would have to spend. Should you have to rebuild your home from the ground up if it was destroyed due to a hurricane and did not have the appropriate coverage.

As a homeowner, you have options when you are selecting the amount of your deductible. When you choose to have a higher deductible, the lower the amount of your premium will be. A higher deductible will make sense if your home has certain windstorm mitigation features. Including hurricane rated windows and doors and window shutters, which may reduce the amount of damage to your home, and therefore lower your risk. When you are a homeowner, and you are deciding on your deductible amount. You should make sure that the deductible you select is one that you can handle should you have to submit a hurricane claim. The hurricane coverage of your policy can prove to be a huge benefit should you ever have to use it, but you need to be able to handle the deductible. Otherwise, what good is the coverage if you cannot afford to use it.