Understanding Hurricane Deductibles

Hurricane insurance is an essential part of homeowner’s policies in places like Florida that can be affected by hurricanes each year. While not a standard part of homeowner’s policies all around the US, hurricane deductibles are a part of the policy functions of policies in all states that might be affected by this kind of disaster.

Homeowner’s policy coverage is intended for use in catastrophic losses, and there is no kind of need that more closely fits this description than a hurricane. If you have a homeowner’s policy and you live in a state where hurricanes are common, you might be wondering how hurricane coverage and deductibles work.

While you may never need to make a claim against your homeowner’s policy, it is always good to know how this important part of your policy works.

What is a Deductible?

A deductible on your homeowner’s insurance policy is the amount that you pay out of pocket when you agree to open a claim for damage to your home. This number might vary depending on your state and the included features of your homeowner’s policy, but you will always pay the deductible when you initiate a claim for damage or loss to your home.

A deductible is essentially the co-insurance that you pay for the privilege of having your loss covered by your insurance company after a disaster or some other event that causes significant damage to your home.

What is a Hurricane Deductible?

Hurricane deductibles on homeowner’s policies differ from the flat deductible that you might be charged for a fire or other kind of loss. This is because a hurricane is a natural disaster and homeowner’s policies pay out on these claims differently than on regular claims.

Hurricane coverage is accessed when a triggering event occurs. This might be a state of natural disaster in your town, or it could simply be confirmation that the hurricane has taken place. Once this factor is in play, the hurricane deductible will be the amount that you pay for the deductible for your claim.

How Much is My Hurricane Deductible?

Hurricane deductibles are calculated as a percentile of the insured damage on a claim, regardless of the value of the home itself. A hurricane deductible is always going to be larger than a flat deductible. In many states, the hurricane deductible is 1-5% of the home’s value. So, for a $300,000 home, the deductible at 5% will be $15,000!

The reason that these deductibles are so high is because natural disaster damage can be quite expensive to insurance companies because an entire state might be affected, or at least large areas within a state could have experienced significant damage. The increased deductible amount was instituted to keep insurance companies afloat when such an event occurs.