WHAT IS A HURRICANE DEDUCTIBLE AND WHEN DOES IT APPLY?

The determination of whether your storm damage was caused by a hurricane as opposed to a regular storm can have a substantial effect on the amount of coverage you can get from your insurance policy.  In order to make sure you are getting the full benefit of your insurance coverage, you need to understand the insurance policy definitions and exclusions that may apply.

What is the definition of a Hurricane for insurance purposes?

A hurricane is defined in s. 627.4025(2)(c), Florida Statutes, as a storm system that has been declared a “hurricane” by the National Hurricane Center of the National Weather Service.

What’s more, hurricane deductibles in Florida apply to any damage that occurs from the time a hurricane watch or warning is issued until 72 hours after the watch or warning ends. Importantly, the deductible can only be applied once each hurricane season, which falls between June and November.

What is the definition of Hurricane Coverage?

“Hurricane coverage” is coverage for loss or damage caused by a windstorm during a hurricane. The term includes damage to the interior of a building or to property inside a building, caused by rain, snow, sleet, hail, sand or dust if the direct force of the windstorm first damages the building, causing an opening through which rain, snow, sleet, hail, sand or dust enters and causes damage anywhere in the state of Florida. This is also found in s. 627.4025, Florida Statutes.

When does the Hurricane Deductible apply?

When you submit a claim for damages after a hurricane, there is usually a special hurricane deductible you must satisfy first. The deductible is the amount that is subtracted from your insurance claim check for property damage or loss. Generally, the hurricane deductible ranges between one percent and five percent of the ins insured value of the home.

According to s. 627.4025, Florida Statutes, the Hurricane Deductible applies only in the event of a hurricane. The duration of a hurricane in which the Hurricane Deductible would apply includes the time period:

      1)   Beginning at the time a hurricane watch or warning is issued for any part of Florida by the National Hurricane Center. Remember, it must be a “hurricane” declared by the National Hurricane Center; and

      2)   Ending 72 hours following the termination of the last hurricane watch or hurricane warning issued for any part of Florida by the National Hurricane Center.

What are the Hurricane Deductible options?

All insurance companies must offer Hurricane Deductible options of $500, 2 percent, 5 percent, or 10 percent of the policy dwelling or structure limits unless the specific percentage deductible is less than $500. The Hurricane Deductible must be listed as a dollar amount, even if the deductible is listed as a percentage amount.

There are a few exceptions to the Hurricane Deductible amounts that must be offered. The exceptions are:

1)  Dwellings insured for at least $100,000 through $249,999: an insurance company may offer a policy that guarantees that the company will not non-renew the policy in order to reduce the hurricane exposure for one 12-month renewal period. However, the policy may include up to a 2 percent Hurricane Deductible.

2) Dwellings with insured limits of $250,000 or more: The insurance company does not have to offer the option of a $500 Hurricane Deductible.

3) Any Dwelling with insured limits of less than $500,000: The policy may not have a Hurricane Deductible in excess of 10 percent unless:

  1. a) The policyholder personally writes and provides to the insurance company the following statement in his or her own handwriting, signs their name, and is signed by all other named policyholders on the policy and dated: “I do not want the insurance on my home to pay for the first (specify dollar value) of damage from hurricanes. I will pay for those costs. My insurance will not.” (Per Section 627.712(2)(a)1, Florida Statutes)
  2. b) If the insured structure has a mortgage or lien, the policyholder must provide the insurance company with a written statement from the mortgagee indicating the mortgagee approves the policyholder electing to have the specified deductible.

This is allowed by, and subject to, regulations outlined in s. 627.701(d)1(a) and (b), Florida Statutes.

How is the Hurricane Deductible Applied to my policy?

Hurricane Deductible applies to personal lines residential property policies. The provision states that after the first Hurricane Deductible has been applied, the deductible for the second hurricane (during the same year) will be the greater of the amount leftover from the first Hurricane Deductible if the deductible had not been met or the “all peril” deductible.

If the hurricane deductible was met in full with the first hurricane claim, the “all peril” deductible would apply to other hurricane claims that occur the same year.

Commercial residential policies (for example) condo association policies, must provide either a hurricane deductible as described above or one with a separate Hurricane Deductible for each hurricane.

Clearly, the interpretation of your insurance policy can have a substantial impact on the amount you can recover after a storm loss.  It is always recommended that you have a property insurance attorney or another insurance claim professional review your policy and the facts of your claim in order to make sure you are fully compensated after your loss.