Understanding Hurricane Deductibles

hurricane insurance

Most people marginally understand the concept of deductibles when it comes to homeowners or even auto insurance. This is your “shared pain” with the insurance companies in the form of money that comes out of your pockets in the aftermath of an accident or covered event. The insurance companies often provide a lower monthly premium in exchange for a higher deductible. The reasoning is simple. The greater your pain at the point of an accident or other covered event, the more incentive you have to take preventative action to protect and safeguard your property.

Deductibles 101

What most people do not realize is that your home actually has two deductibles in many locations. One is the standard deductible you know and understand with the other being a hurricane deductible. The primary deductible on your homeowner’s policy is typically a specific dollar amount. When a claim is paid by the insurance, they will withhold the amount of the deductible from claims checks they send to you. If your home has $34,000 worth of damage, but you have a $1,000 deductible, you will receive a check from the insurance company for $33,000.

Unlike the standard deductible which is a flat rate, the hurricane deductible generally applies to homes valued at $100,000 or more, according to the Insurance Information Institute, and generally begins at two percent of the amount your home is insured for. One important thing to note is that your coverage and deductibles will vary greatly from one insurance provider to the next as well as from one state to the next. This means it is in your best interest to shop around among companies that operate within your state to find the one that offers the best combination of cost, coverage, and hurricane deductible terms to meet your needs.

How Long have Hurricane Deductibles Been Around?

Hurricane deductibles are not a new thing for insurance companies. Large scale and widespread hurricanes like Hugo, which devastated South Carolina in 1989 and Andrew which decimated Florida in 1992 showed huge vulnerabilities for insurance companies to cover the losses from these massive weather events. And of course, the recent devastations from Hurricanes Harvey, Irma and Maria.  In order for insurers to continue offering coverage in these high-risk areas (that consumers could afford) they needed to make changes that involved consumers carrying more of the risks in the form of hurricane deductibles.

It’s always wise to discuss your insurance concerns and needs with a trusted insurance agent before making insurance purchasing decision for your home. In high-risk areas for floods, hurricanes, earthquakes, wildfires, and other events such as these, the need is even greater so that you can buy with confidence that your needs are met and that you understand the way your policy works.

To learn more about hurricane deductibles, give us a call here at BOLT Insurance Agency. 1-800-216-4171