What are Hurricane Deductibles?
A deductible is a minimum fee paid by homeowners before insurance companies provide any coverage. Generally speaking, deductible fees come at a flat rate. Hurricane deductibles, however, are not so forgiving and often take unprepared homeowners by surprise. Rather than a flat rate of $500 or $1,000, hurricane deductibles demand a payment of 1 to 5 percent of the total property value. For a standard $200, 000 home, homeowners can be forced to pay as much as $10,000 out of pocket. For hurricane deductibles to take effect, a tropical storm must be classified a minimum of a category 1 hurricane, meaning it sustains wind speed of at least 74 mph.
History of Hurricane Deductibles
The idea of hurricane deductibles began in 1992 after hurricane Andrew, the 4th costliest hurricane in U.S. history, caused $15.5 billion in damages. In order to protect themselves from heavy payouts, many insurers have adopted hurricane deductibles into their policies in hurricane danger zones in coastal regions.
Because they can be controversial, hurricane deductible policies vary by state.
Which States Allow Hurricane Deductibles?
States that are subject to hurricane deductibles:
- New Jersey
- New York
- North Carolina
- South Carolina
- Rhode Island
- District of Columbia
Hurricane deductibles are not allowed in Pennsylvania, New Hampshire or Ohio.
What should you do?
Homeowners with hurricane insurance should review their insurer’s policy on hurricane deductibles in order to be prepared for potential costs. Because insurance policies and deductibles are often ambiguous, homeowners may benefit from contacting an attorney if they feel they have been wronged by an insurance company.