Hurricane Deductible

A hurricane deductible is the amount a homeowner must pay before insurance will cover the damage caused by a hurricane. Hurricane deductibles are separate from regular homeowners insurance deductibles and are based on a percentage of the home’s value. While a regular homeowners insurance policy deductible is a fixed dollar amount, like $500 or $2,000, a hurricane deductible might be 1 to 5 percent of a home’s value, or $1,000 to $5,000 for every $100,000 in home value.

Hurricane deductibles came about in 1992 after Hurricane Andrew’s massive damage to South Florida inflicted major losses on homeowners insurance companies. Insurance companies turn to reinsurers when they’re having trouble paying large amounts of claims all at once, but even reinsurance companies were struggling under such enormous losses. As a result, insurance companies began requiring hurricane deductibles in 19 states and Washington, D.C. Homes in these states, which are all on the Gulf of Mexico or Atlantic Coasts, are susceptible to hurricane damage.

For a homeowner to be required to pay a hurricane deductible, there usually must be a named hurricane in the area, but sometimes a tropical storm will trigger a hurricane deductible. The hurricane deductible will be in effect for any damage that occurs until the storm is downgraded. Rules vary by state.

Even when a hurricane deductible doesn’t apply, a windstorm deductible might apply. It’s important to read your homeowners insurance policy to understand what deductibles you are responsible for and under what circumstances so you’re prepared to cover the repair bills that your insurance won’t. Homeowners should also be aware that even if they pay a hurricane deductible, their homeowners insurance won’t cover flooding; they need a separate flood insurance policy to cover flood-related damage. The good news is that homeowners in some states who make improvements so their homes will suffer less damage from a hurricane will pay lower insurance premiums. An example of such an improvement is installing storm shutters or installing hurricane-resistant laminated glass windows and doors.

The states where hurricane deductibles apply are: Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia and Washington DC. 

To some degree, depending on the state, insurance companies dictate the level of the hurricane deductible and where it should apply, except in Florida where state law dictates these variables. Insurers' hurricane deductible plans are subject to state insurance departments and may be subject to various regulations and laws.