“What is a hurricane deductible?”
Hurricane season spans from June to November on the East Coast. During these months, every coastal state from Maine to Florida is susceptible to severe hurricane damage. To put it into perspective, hurricane and tropical storms have caused $158.2 billion in insured losses from 1993 to 2012 in the United States (according to ISO; Insurance Services Office).
Unlike regular home insurance deductibles that require you to pay a set dollar amount (typically $500 or $1000) before an insurance company will pay for a covered claim, hurricane deductibles are typically percentages (usually 1% to 5% of the amount the home is insured for) that the homeowner needs to pay. Hurricane deductibles may also be set dollar amounts, but are usually higher than the regular policy deductible. Hurricane deductibles in Rhode Island cannot exceed more than 5 percent of a given value of the property. Hurricane deductibles are only applied in the event of a storm that is declared to be a hurricane by the National Weather Service.
A common misunderstanding is that a hurricane deductible is calculated as a percentage of a loss. Many homeowners with hurricane deductibles on their policies mistakenly believe that they will be responsible for paying a percentage of their claim. However, this is not the case at all. In the event of a claim caused by a hurricane, the homeowner’s hurricane deductible means that the homeowner will be required to pay a percentage of the amount the house is insured for before the insurance company will pay anything.
For example, a house that is insured for $200,000 and has a hurricane damage deducible of 5% means that the homeowner would be responsible for the first $10,000 of any loss! So, if a hurricane caused roof damage to that house and the damage was $7500, the homeowner would have to pay for the loss out-of-pocket because the damage didn’t exceed the hurricane deductible.
We strongly recommend that you check your policy to be aware of your policy deductibles. Many homeowners in Rhode Island have policies with hurricane deductibles that they are unaware of or don’t understand. If you have questions about your policy, give us a call at (401) 723-8510 or visit us online. We will be happy to explain them to you.