The creation and widespread adoption of hurricane deductibles in coastal areas was largely driven by Hurricane Andrew in 1992 and Hurricane Katrina in 2005. These deductibles weren’t just the homeowners insurance companies’ idea. Although the company that holds your homeowners insurance policy may be the easiest target for your ire, their hands were somewhat tied in the creation and implementation of hurricane deductibles.

Insurance companies have reinsurance companies that help them cover massive losses incurred during disasters. Those reinsurance companies essentially gave insurers an ultimatum after Hurricane Andrew and Hurricane Katrina – do something about the risk and reduce our potential for catastrophic losses or else.

Hurricane deductibles were the solution. The idea behind hurricane deductibles – also sometimes referred to as windstorm deductibles – isn’t all that complicated. Most insurance policies have deductibles based on dollar amounts. You might need to pay the first $500 for repairs and they’ll pay for the rest up to your policy limit. Hurricane deductibles are based on a percentage of the insured property’s value instead of a set dollar amount.

For example:

• Your home’s insured value is $250,000
• You have a $1,000 deductible for non-hurricane or windstorm damage
• You have a 10 percent hurricane deductible

If you have a fire in your kitchen or a plumbing leak causes flooding, you’ll need to pay the $1,000 deductible before the insurance company will pick up the rest of the repair bill.

If a hurricane hits your Florida home and shingles are torn off your roof, debris is thrown through windows and water is blown into your home, you’ll have to pay the first $25,000 for repairs out of your own pocket.

The problem for many Florida homeowners is twofold:

• $25,000 is a lot of money and it may feel as if a deductible that high defeats the purpose of having homeowners insurance
• Even severe damage may be under $25,000 to repair

There are several options for hurricane deductibles – which are often two percent, five percent or 10 percent of your home’s insured value. The typical Florida homeowner has a two percent hurricane deductible, but you can choose to have a higher one.

Many policies also have a Single Season Hurricane Deductible provision. That means you only have to deal with the higher hurricane deductible ones per hurricane season. If a second hurricane damages your home in the same hurricane season you won’t be forced to pay the percentage-based deductible a second time.

The Single Season Hurricane Deductible is why you should always report hurricane damage to your insurer. Even if they don’t end up paying you anything for your first claim, they will still have to waive the hurricane deductible and use your regular deductible for the second storm – if you reported the damage from the first storm.  

What Can You Do to Avoid Massive Losses from Hurricane Deductibles?

There are only a couple ways around the hurricane and windstorm deductible problem. The most obvious one is to pay for a lower percentage. You’ll pay a much lower monthly premium with a 10 percent windstorm deductible than you would if you had a five percent or two percent hurricane deductible.

However, if you do pay for a two percent hurricane deductible then in the above scenario your deductible would only be $5,000 – which is much more manageable for the average homeowner to pay. At five percent you’d be paying $12,500. Although that’s still high, it’s half of the $25,000 you’d need to pay for repairs with a 10 percent hurricane deductible.

The second option is to convince the insurance company that your damage should not trigger the hurricane deductible and that you should only have to pay your normal deductible.

Every company and state is able to define the hurricane deductible “trigger event” for residents and policyholders. In Florida that usually means the windstorm deductible is triggered whenever the National Weather Service names a storm that will hit Florida. The window for the trigger is 24 hours before the storm naming and 72 hours after the hurricane watch has ended or the storm has been downgraded.

That means if you prove the damage happened to your home at least a day before a storm was named or didn’t occur until a few days after the storm passed, you will only have to pay the regular deductible.

You might also be able to avoid the deductible if your damage was wind related but wasn’t caused by a named tropical storm or hurricane. For example, you can try to convince the insurance company that the water damage your home suffered was attributable to old roof damage that wasn’t caused by the latest storm. Whether or not a strategy like that would work really depends on the facts of your case.

Filing claims for storm damage of any kind is complicated, but things can get especially convoluted when hurricane deductibles are in the mix. That’s why many homeowners who live in areas with particularly high hurricane risks prefer to pay the higher premiums and be subject to the lower windstorm deductible. It’s the most reliable way to prevent yourself from having to pay tens of thousands of dollars out of pocket for hurricane damage repairs.