Parsing the Windstorm Deductibles

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By Victoria Ostrosky

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Hurricane deductible. Wind/Hail deductible. Named Storm deductible. These are synonymous terms, right? Wrong. If you don’t know which deductible you have, you may one day deal with more than damage to your home, but severe damage to your bank account as well. For wind coverage in Florida, you’ll generally see one of these three deductibles listed on your policy, along with your All Other Perils (AOP) deductible.

I’m originally from Michigan where we get the occasional tornado and frequent thunderstorm with accompanying awesome lightning displays. In Arizona, where I lived, we had mile-wide dust storms, or haboobs, as they’re referred to there. But Florida and other Gulf states are different. Living in such close proximity to the emerald water and chamois soft white sand, you’re going to pay some dues. And part of those dues come in the form of various wind deductibles.

According to the NAIC’s (National Association of Insurance Commissioners) blog from May 17th of this year, “[H]urricane and named storm deductibles were introduced as a risk-sharing mechanism, by having the policyholder bear more of the risks, without raising overall premiums to unaffordable levels.”

Sounds good, so, let’s discuss them, shall we?

First, though, what is the All Other Perils (AOP) deductible and how does it differ from the hurricane/wind-hail/named storm deductible? Your AOP deductible applies to losses caused by perils other than wind, such as fire or theft, smoke or water damage (other than flood). AOP deductible options are usually offered between $500 and up to $10,000 per occurrence. Most insureds carry either a $1,000 or $2,500 AOP deductible on their homeowner’s policy.

Wind deductibles, however, are typically a percentage of the Dwelling Limit, or Coverage A, with options ranging from 2% up to 10%. A higher percentage means more exposure and a lower premium.

Let’s briefly look at these three deductibles and what they mean to you.

When a policy is written with the Wind/Hail Deductible, this option results in the greatest exposure to you, the insured. This coverage is triggered by any type of wind event including a thunderstorm, tropical depression, or hurricane. If a strong windstorm results in a tree falling on your roof, you would file a claim under this deductible. If you have $400,000 of coverage on your dwelling and are carrying a 2% wind/hail deductible, you’ll be out of pocket the first $8,000 of the claim.

The next type of wind deductible is the Named Storm Deductible. This one is triggered when the National Weather Service declares a weather event to be a named storm or hurricane. For example, take Tropical Storm Barry the other week. With this deductible, if TS Barry would have damaged your home, you could be filing your claim under your Named Storm deductible and not your AOP deductible.

The third type of wind deductible option is the Hurricane Deductible. This one is triggered when the National Weather Service declares the storm a hurricane. We all remember Hurricane Michael last October.

The most preferred type of deductible which creates the least exposure is the Hurricane Deductible.  Any wind event not rated as a hurricane that damages your home would fall under your AOP deductible resulting in less out of pocket expense to you.

Under the official website of the Division of Consumer Services, (https://www.myfloridacfo.com/Division/Consumers/FloridasHurricaneDeductible.htm) it defines when your hurricane deductible applies:

“According to s. 627.4025, Florida Statutes, the Hurricane Deductible applies only in the event of a named hurricane. The duration of a hurricane in which the Hurricane Deductible would apply includes the time period:

1) Beginning at the time a hurricane watch or warning is issued for any part of Florida by the National Hurricane Center, and

2) Ending 72 hours following the termination of the last hurricane watch or hurricane warning issued for any part of Florida by the National Hurricane Center.”

Keep in mind, carriers can have variations on coverage language, restrictions, and exclusions. So, you always need to read your specific policy to know your exact coverages.

Most admitted carriers in Florida offer the Hurricane deductible. Many surplus lines carriers offer the Wind/Hail or Named Storm deductibles. Make sure you know what you have.

Insurance can be confusing, and it’s always best to contact your agent to discuss your wind deductible and other coverages in your policy to ensure your coverages are customized for your unique needs.

Insurance Zone, owned by Joe and Lea Capers, is a full service commercial and personal lines insurance agency serving Destin, Miramar Beach, Santa Rosa Beach (30A) and Inlet Beach. Visit their Video Library on www.ins-zone.com and watch our informative video on ’Homeowners Insurance and Umbrella,’ or call 850.424.6979. Victoria Ostrosky, author of this article, is an Agent/CSR with IZ. 

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