Policyholder Question on Changing Hurricane Deductible

Q. Could one choose to have a larger deductible on hurricane insurance? For example; a 20% or 30% deductible on a $100,000 home? What would be the savings as opposed to a 10% deductible?

A.I suspect this is one issue that will be on a lot of people’s minds after Super Storm Sandy and the expected increase in property insurance premiums that are likely to follow.

If I may, a little history from our Florida experience. Before Hurricane Andrew in 1992 there were no wind percentage deductibles, except for some limited high risk pools, primarily in a few counties in Southeast Florida. After Andrew they became ubiquitous. Post loss underwriting is a common business practice with many insurance companies and these percentage deductibles are a classic example. Having said that, most insurance companies are required to submit forms to their state insurance departments for approval. As an example, in Florida a 5% wind deductible is the cap that is allowed on admitted homeowners carriers. Surplus lines (non-regulated as to rates and forms) who are not admitted but still have a license to sell in a state can offer higher percentage deductibles. You need to check with your state department of insurance to see what has been approved. I would caution you against high wind percentage deductibles if you are in a high wind zone. Basically, you are self insuring for the amount of the deductible and other policy terms and conditions that apply may make you a larger self insurer before you see one dollar of your insurance companies money for your wind loss. Please make sure you can handle the financial risk. Good luck

If you have questions regarding any property insurance related issues please call 800.321.4488 or contact us to submit a question to one of our public adjuster or loss assessor experts

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