Without your professional expertise, we would not have known how to assemble our claim or properly document it, nor would we have known what to ask for. Your efforts resulted in an outcome that not only justified your fee, but more importantly helped us get back to business. Bahamas Hotel Resort

Understanding Hurricane Percentage Deductibles

The Atlantic hurricane season that officially starts June 1st through November 30th brings with it the very real threat of insured property owners having to pay a significant amount of money to repair their hurricane damaged property, even though they purchased first-party property wind hurricane insurance. The reason is the hurricane percentage deductibles found in most, if not all, property insurance policies. These deductibles are a relatively recent change to Florida property insurance policies that came about as a result of Hurricane Andrew in 1992.

Hurricanes and the damage they cause are certainly not new, but due to Hurricane Andrew’s widespread destruction, Florida’s population growth and the building boom that followed, insurance companies were given a wake-up call that business as usual was not going to apply to property insurance in Florida.  One step they quickly implemented in the Florida insurance underwriting market was the creation of the so called “hurricane deductible” also known as percentage wind deductibles.

What then are hurricane deductibles and how do they apply?

In Florida the application of these deductibles are controlled by Florida Statute 627.701(5) (a) that states:

The hurricane deductible of any personal lines residential property insurance policy issued or renewed on or after May 1, 2005 shall be applied as follows:

1. The hurricane deductible shall apply on an annual basis to all covered hurricane losses that occur during the calendar year from losses that are covered under one or more policies by the same insurer.

2. If there was a hurricane loss for a prior hurricane or hurricanes during the calendar year, the insurer may apply a deductible to a subsequent hurricane which is the greater of the remaining amount of the hurricane deductible or the amount of the deductible that applies to perils other than hurricanes. Insurers may require policyholders to report hurricane losses that are below the hurricane deductible or to maintain receipts or other records of such hurricane losses in order to apply such losses to subsequent hurricane claims.

While this statute can be read by the lay person, I think it is good to go over some of the details as to how it works. The public adjusters at Tutwiler & Associates feel the next big storm will be a major wake up call for property owners in regards to how these deductibles work just as Andrew was to the insurance underwriters.

So with this back drop, when does a hurricane percentage deductible apply verses the standard deductible that may be in a property policy for perils covered by insurance for damages such as wind, fire, water, etc?  The Florida statute makes it clear that the trigger for applying these deductibles is the National Hurricane Center. Any claim for wind damage that results from the time a hurricane watch or warning is issued for any part of Florida, up to 72 hours after a watch or warning ends and anytime hurricane conditions exist throughout the State will be subject to these deductibles.

The actual application of these deductibles is based on a percentage amount of the insured value in the property policy.  For example: If the homeowner (this also applies to commercial policies if they have hurricane coverage with percentage deductibles) insures their home for $250,000.00 and elects a 5% hurricane deductible, the deductible that will apply to the loss will be $12,500.00. This is the amount the homeowner will have to pay assuming there are no other exclusions or limitations such as exterior paint damage or other non-covered items or events in a loss that the insured will have to pay out-of-pocket before their insurance begins to pay for the loss. It should be clear that a wind loss from a wind storm not declared a hurricane by the National Hurricane Center may result in a standard deductible which in most cases would be a great deal less.

The published insurance literature states that all insurers (for personal lines-homeowners) must offer hurricane deductibles of $500.00, 2%, 5% and 10%.  Obviously, the higher the percentage, the lower the premium cost for hurricane wind insurance.  Of course the trade-off for paying lower premiums is that you expose yourself to a very high cash payout if a hurricane damages your property. Please make sure you can absorb that kind of payment.  You should also check your policy to see what hurricane deductible percentage is stated in the policy. The rules that apply require your policy to have boldface type, no smaller than 18 points which state the following: “This Policy Contains a Separate Deductible for Hurricane Losses, Which May Result in High Out–Of–Pocket Expenses to You.”  For personal lines residential property insurance policies the insurer must prominently display the actual dollar value of the hurricane deductible on the declaration page of the policy or on the renewal notice.

If you are insured by a non- standard “surplus lines” carrier, these rules may not apply as recent legislation exempted these companies from most of the standard insurance regulations.  As this is a very important issue, it should be discussed with your agent/broker or legal counsel before a hurricane warning or watch is issued as you cannot take out a new policy during that time.

FAQs About Hurricane & Windstorm

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This is a situation where we may be able to help. First we would want to arrange an inspection with you and ideally with your contractor. A review of your property insurance contract would be in order to determine coverage, exclusions, limitations, conditions, etc. Do you have ordinance and law coverage for example? Will the building department require you to replace the whole roof because it is damaged and does not meet current code?  Based on our/your contractor’s assessment can an argument be made for replacement under your property insurance policy? Will a roof consultant/other expert be needed? Each case is unique with its own set of evidence. But this is a case that we would want to assess in person and then let you know our opinion firsthand. If agreement as to amount cannot be reached with your insurance carrier then a formal appraisal process may be an option. 

Maybe. A determination would need to be made whether or not you purchased a sign coverage endorsement or not. Typically carriers write the basic building policy and seek to exclude accessories like signs, awnings, antennae’s, etc, unless you have paid an additional premium and added a specific item by endorsement. In all cases it pays to read your policy.

First of all, Tutwiler and Associates has one of the best track records when it comes to handling windstorm losses on behalf of condominium associations. A quick review of our success stories on our web site will vouch for that. We understand the special problems and needs of condo associations and in fact are gold members of the Community Association Institute. We will work with you to bring together the right team of professionals to document your windstorm losses and perfect your claim. We welcome the opportunity to meet with you and discuss options.

Yes, in this situation we would recommend several things. After a review of your policy to determine the coverage’s available, we would then want to complete our own building damage assessment and compare it with both the contractors and insurance company assessments. If it is determined that the carriers estimate is deficient, then, with your permission, we would pursue them on your behalf. We would want to complete a contents inventory with you. If you have a lot of contents, then this can be a lengthy and time-consuming endeavor but it can generally pay off for you. Obviously photographic documentation would be made. As far as your temporary apartment, this typically falls under loss of use and/or fair rental value and/or additional living expense coverage in your policy. It would depend on your specific policy language, but in general, these coverage’s are limited to a maximum amount and time and the expense must be incurred by you after that limit is reached. Some policies have language to the effect that they will only pay for the temporary living quarters for the reasonable repair time it takes to repair your home. That can be a subjective determination. 

Prior to the 2004/2005 hurricanes their was a section of Florida primary in the then high wind zone of Dade Broward Monroe and Palm Beach counties where there was a wind/paint exclusion. After 04/05 we stared to see these endorsement added to all coastal areas. This can be big expense particularly to large structures like condo towers. It is very likely that your policy has a provision that will not allow you to use this excluded cost to apply as an offset for the large hurricane deductible. This is added insult to injury in our opinion.

It depends. If inspection of your building reveals a breach in your roof membrane that allowed water to enter the building, for example, then you should have coverage. If on the other hand, it is determined that you simply have a wear and tear or maintenance type problem not caused by a windstorm, then typically your policy will exclude this type of loss.

This is a term that has been added to most property policies following litigation in California that provided coverage for a loss when one cause of a loss was covered and the other cause that was excluded occurred more or less at the same time. The courts said the whole loss was covered if one part was covered. The anti-concurrent causation clause was added to try and preclude this result. This issue was litigated in Hurricane Katrina with “slab losses” were a structure was washed /blown away. Expect to hear a great deal more about this controversial term in the next big wind/flood event. 

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Local Office

Charles R. Tutwiler & Associates Inc., DBA Tutwiler & Associates Public Adjusters
Licensed Public Insurance Adjusters & Loss Consultants
Offices: Tampa, Orlando, Ft. Lauderdale, Palm City, Ft. Myers, Florida; Dallas, TX; Pittsburgh, PA

Executive Office
4300 W. Cypress St.
Suite 780
Tampa, FL 33607
Phone: 813.287.8090
Toll Free: 800.321.4488

Licensed in Florida # W840088 &
Texas #1399706 plus 16 other states
and the Virgin Islands