Hurricanes and homeowners’ insurance deductibles

Florida is the only state with calendar year deductibles, which are applicable to all losses that occur in one calendar year. Here, a sprinkler spews out water after a tree came down on a fence in Surfside, Fla., during Hurricane Irma on Sunday, Sept. 10, 2017. (AP Photo/Wilfredo Lee)
A standard homeowners policy covers damage from wind.

However, damage from hurricane strength winds is a different matter and can cause severe damage to property, even demolishing buildings.

Many states in hurricane prone areas have developed specific deductibles that apply in the event of a hurricane. Many endorsements use watches and warnings from the National Hurricane Center (NHC) or the National Weather Service (NWS) as the trigger for use of the deductibles. Both agencies are part of the National Oceanic and Atmospheric Administration (NOAA). Deductibles are often available as a dollar amount or a percentage. The insured selects the deductible that individual is comfortable with, and it is scheduled onto the endorsement.

Florida is the only state with calendar year deductibles. Calendar year deductibles are applicable to all losses that occur in one calendar year. If the policy spans more than one calendar year, then two separate calendar year deductibles are used.

Consider this: A policy is effective from June 1, 2016, through that same day the following year. The calendar year deductible is $5,000.

In August 2016, the insured sustains a hurricane loss and the $5,000 deductible is applied. In June 2017, the insured sustains another hurricane loss. Because this is a different year, even though it is the same policy period, another $5,000 hurricane deductible is applied.

Christine G. Barlow, CPCU.

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