Hurricane Danny was named the first hurricane of the Atlantic 2015 hurricane season. It is still far from Florida, however, if you are a Floridian, you might take the time to pull out your homeowners or commercial property insurance policy to review your coverage and what your duties are after a loss.
One of the primary things you probably want to know is how much of a deductible will you be responsible for in the event of a loss? Many policies will have specific “hurricane deductibles” that apply solely to damage from hurricanes. There are also windstorm or wind/hail deductibles that apply to wind damage. The Insurance Information Institute provides a nice summary of Florida Hurricane Deductibles:
Hurricane deductibles are percentage or dollar deductibles that are higher than for other causes of loss. They are calculated as a percentage of the dollar amount of coverage on the dwelling or as a flat dollar amount like a standard deductible. By Florida statute, the application of hurricane deductibles is triggered by windstorm losses resulting only from a hurricane declared by National Weather Service. Hurricane deductibles apply for damage that occurs from the time a hurricane watch or warning is issued for any part of Florida, up to 72 hours after such a watch or warning ends and anytime hurricane conditions exist throughout the state.
Hurricane deductibles and their triggers are set by law and are the same for the private, or regular market, as well as Florida’s Citizens Property Insurance Corporation (CPIC), the state-run program which provides property insurance to consumers. The hurricane deductible applies only once during a hurricane season. All insurers must offer a hurricane deductible of $500, 2 percent, 5 percent and 10 percent of the policy dwelling or structure limits. The percentages are based on the total value of the home (e.g., a 10 percent hurricane deductible on a $200,000 home would be $20,000). In some cases a deductible of more than 10 percent is permissible. For example, for homes that are insured for less than $500,000, the deductible can be higher than 10 percent if the homeowner states the dollar value of the deductible in a letter to the insurer. The deductible must be stated in the policy as a dollar amount regardless of the percentage.
Florida Statutes Section 627.701(4)(a) provides that there is mandatory policy language regarding separate hurricane deductibles:
(4)(a) Any policy that contains a separate hurricane deductible must on its face include in boldfaced type no smaller than 18 points the following statement: “THIS POLICY CONTAINS A SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU.” A policy containing a coinsurance provision applicable to hurricane losses must on its face include in boldfaced type no smaller than 18 points the following statement: “THIS POLICY CONTAINS A CO-PAY PROVISION THAT MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU.”
Of course, Florida is not the only state that has hurricane deductibles. There are 19 states (Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia) as well as the District of Columbia that have hurricane deductibles.