Hurricane Deductibles

In the world of home ownership, understanding the intricacies of home warranties and insurance policies is crucial. One such intricacy is the concept of hurricane deductibles, a term that can often cause confusion for many homeowners. This page aims to comprehensively explain hurricane deductibles within the context of home warranties, exploring their definition, how they work, their importance, and how they differ from other types of deductibles.

What Are Hurricane Deductibles?

A hurricane deductible is a specific type of deductible that applies to insurance claims made due to damage caused by hurricanes. Unlike standard home insurance deductibles, typically a fixed dollar amount, hurricane deductibles are often calculated as a percentage of the home's insured value.  The percentage can range anywhere from 1% to 5%, depending on the specifics of the insurance policy and the location of the property. This means that the amount a homeowner must pay out-of-pocket before their insurance coverage kicks in can vary depending on the value of their property and the terms of their policy.

The purpose of a hurricane deductible is to shift some of the risk of hurricane-related damage from the insurance company to the homeowner. Insurance companies can offer lower premiums by having a deductible in place, as the homeowner is assuming a portion of the risk.

How Hurricane Deductibles are Triggered

For a hurricane deductible to be triggered, the National Weather Service must first declare a hurricane. Once this declaration is made, any damage that occurs to the insured property as a result of the hurricane is subject to the hurricane deductible. This includes damage caused by wind, rain, and other weather-related factors associated with the hurricane.

It's important to note that the trigger for a hurricane deductible is not based on the severity of the hurricane, but rather its official classification. This means that even a Category 1 hurricane can trigger the deductible, provided the National Weather Service officially declares it as such.

How Hurricane Deductibles Work

Hurricane deductibles are triggered by specific conditions outlined in the insurance policy. These conditions typically include the declaration of a hurricane by the National Weather Service (NWS) or another official meteorological authority. Here’s how hurricane deductibles generally work:

1. Triggering Event

A hurricane deductible is activated when a hurricane watch or warning is issued by the NWS or a named storm makes landfall. The exact conditions for triggering the deductible are specified in the insurance policy.

2. Calculation of Deductible

Hurricane deductibles are usually calculated as a percentage of the insured value of the home. Common percentages range from 1% to 5%, though higher percentages can apply in high-risk areas. For example, if a home is insured for $300,000 and the hurricane deductible is 3%, the deductible amount would be $9,000.

3. Applicability

The hurricane deductible applies to all covered damage resulting from the hurricane. This means that if the total damage exceeds the deductible amount, the insurer will cover the remaining costs up to the policy limits.

4. Separate from Standard Deductibles

It’s important to note that hurricane deductibles are separate from standard home insurance deductibles. A policy may have a fixed dollar amount deductible for most types of damage (e.g., fire, theft),while the hurricane deductible specifically applies to hurricane-related damage.