In most parts of the country, where the threat of hurricanes is low to non-existent, a typical homeowners insurance policy for the average homeowner has one deductible for any type of loss that may occur. When it comes to Florida and other coastal states prone to hurricanes it’s normal to have 2 deductibles show up on your policy: A “Hurricane Deductible” and an “All Other Perils Deductible”. On the face of it, it appears rather simple – the hurricane deductible applies in the event of hurricane damage and the all other perils deductible applies for any other covered loss, right? Well, kind of but not exactly – so let’s explain.
First, we need to point out that every insurance policy is different, so while this explanation should stand up in most situations for most homeowners, be sure to refer to your specific insurance policy to see how your deductibles work in relation to a covered claim you may experience.
In the typical Florida homeowners insurance policy, the Hurricane Deductible is displayed on the declarations page and will usually be listed as a percentage of the Coverage A dwelling limit. The common percentage selected is either 2% or 5%, but it’s possible yours is different, and it’s also possible that your hurricane deductible is listed as a flat amount like $1,000. Assuming your policy has a percentage-based hurricane deductible like most do, then that percentage is based on the amount of Dwelling Coverage (Coverage A) your policy provides for your home. Assuming your dwelling is covered at a limit of $500,000, that means a 2% Hurricane Deductible would equate to $10,000. Beyond this, when you actually read the specific language of the policy, this deductible is actually called a “Calendar Year Hurricane Deductible”, which means you can only pay this deductible once per calendar year regardless of how many hurricane claims you may experience in a calendar year (January 1 through December 31 of any given year).
What does that mean if I have suffered damage from multiple Hurricanes this year?
Unfortunately, 2024 has been a rough hurricane season for the gulf coast of Florida. We’ve had 3 hurricanes make landfall in just over a 2-month period of time, wreaking havoc up and down the gulf coast of Florida. Hurricane Debby made landfall as a Category 1 Hurricane near Steinhatchee, FL on August 5, 2024. Hurricane Helene then made landfall as a Category 4 Hurricane near Perry, FL on September 26, 2024. And finally, Hurricane Milton made landfall as a Category 3 Hurricane near Siesta Key, FL on October 9, 2024. Hurricanes Helene and Milton caused devastating storm surge flooding, and, combined there are over 300 deaths linked to the two storms.
About 20 years ago, Florida experienced a similarly active hurricane season – 4 different hurricanes made landfall in our state in 2004, 3 of which had paths cross over a single spot in Polk County, FL. This resulted in many homeowners having damage occur from multiple different hurricanes, which means multiple claims had to be filed. In 2004, the Hurricane Deductible existed, but it was applied on a per-claim basis which meant that if a homeowner had damage from 3 different storms, they were responsible for the large hurricane deductible for each claim separately. As a result of this, new state laws were passed in Florida requiring the hurricane deductible to apply only once per calendar year for most homeowners insurance policies offered in the state. This is when the term “Calendar Year Hurricane Deductible” was created and incorporated into Florida homeowners insurance policies. To break it down, in the event of multiple hurricanes causing damage, the first hurricane loss would be subject to the hurricane deductible. Assuming the hurricane deductible is exhausted in that first hurricane claim, subsequent hurricane claims would have the “All Other Peril” deductible applied instead of the hurricane deductible.
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Let’s look at an example: Assume Jane Smith has a homeowners policy covering her home at $350,000. She has a 2% Hurricane Deductible selected which equates to $7,000 and a $2,500 All Other Perils deductible selected. Her home suffers wind damage from both Hurricanes Helene and Milton. What deductibles would be applied to her claims in this scenario?
- Hurricane Helene causes extensive damage to her shingle roof. The adjuster determines full replacement is necessary at the cost of $18,000.
REPAIR: $18,000
HURRICANE DEDUCTIBLE: -$7,000
TOTAL CLAIM PAYMENT: $11,000 - Hurricane Milton causes a tree to fall onto her home severely damaging the roof, the trusses, and the interior of the garage. The adjuster determine the covered repairs to cost $80,000. Since the Hurricane Deductible was fully exhausted from the prior hurricane claim this year, the All Other Peril deductible will apply instead.
REPAIR: $80,000
ALL OTHER PERIL DEDUCTIBLE: $2,500
TOTAL CLAIM PAYMENT: $77,500
If you are interested in working with an agency who knows the ins and outs of the hurricane deductible then you need to contact our office for a review of your current coverage! At Evolve Insurance Agency, we work with many different insurance companies who provide multiple different options for deductible selections. Before you renew it, let us review it by calling us at 941-244-2760 or Requesting a Quote from our website!
Thank You,
David Kronk
Owner, Evolve Insurance Agency