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Hurricane Deductible Explained

Hurricane Deductible Explained

If your home is located in an area that has high chances of being affected by a hurricane, chances are your homeowners insurance policy will include hurricane deductible. As a result of increased popularity and development along the east coast, as well as, areas facing the Gulf of Mexico, this deductible has been added to at least 19 states including Washington, DC.

What is Hurricane Deductible?

A hurricane deductible is an amount that homeowners must pay before their insurance provider will pay for any claim for damages due to a hurricane occurence. Hurricane deductible is typically separate from the standard homeowners insurance deductible and is usually based on the value of the property. Most homeowners insurance deductibles are set amounts, such as $500 or $1,000. However, with hurricane deductible, it will typically be 1% – 5% of the total value of the home. The rate can range between $1,000 to $5,000 for a home that is valued at $100,000.

In some areas where there is a higher risk of windstorm, 5% of the value may be applied. Additionally, there are also states and insurance companies where homeowners can choose the percentage of deductible in exchange for a lower premium.

Hurricane deductible started around 1992 after Hurricane Andrew caused massive damage to Florida. It caused so much damage that homeowners insurance companies had difficulty in paying off the damages, and at this point, even reinsurers also struggled to pay up the damages all at once. To avoid these problems again, insurance companies started requiring hurricane deductibles to be applied to specific states. These states are located either on the Atlantic coast or along the Gulf of Mexico.  

The Insurance Information Institute shares that hurricane deductibles allow more insurance companies to offer competitive home insurance rates. However, with this in place, homeowners along the coast also share the burden with insurance companies when it comes to the risk of experience dwelling and property damage.

States Requiring Hurricane Deductible

There are 19 states where hurricane deductible is included in homeowners insurance:

When Do You Need To Pay A Hurricane Deductible?

To be required to pay a hurricane deductible, there must be a named hurricane with the location of your home. However, there are also cases when tropical storms can trigger insurance companies to require hurricane deductibles. Typically, this deductible will be in effect for damages that happened until the hurricane is downgraded, although rules may vary from one state to another. Triggers for hurricane deductible may vary from state to state and even from one insurance company to another.

Sometimes, when a hurricane deductible does not apply, windstorm deductible may apply so make sure to check your homeowners insurance thoroughly. Another important factor that you must consider is that home insurance usually does not cover flood or water damage. Flood damage can be added to your standard insurance for as an add-on.  

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