Hurricane Deductible
Candlefocus EditorA hurricane deductible essentially works by incrementally shifting some of the responsibility for paying for hurricane damage from the insurer to the policyholder. Policyholders that experience hurricane-related damage must pay the hurricane deductible before their home insurance policy covers the rest of the related losses. This additional fee is designed to make people less inclined to file for claims for hurricane-related damage — but also to mitigate the risk of insurers being overwhelmed by multiple claims for the same event at the same time.
The monetary value of a hurricane deductible can vary from policy to policy, as sometimes it's a flat fee, while other times it is a percentage of the policy's coverage limit. For example, a hurricane deductible can be set to a fixed $2,000 fee no matter the policy's coverage limit, while in other cases, it might be a more adverse 2% fee of the coverage limit, which would yield an amount twice as high for higher coverage limits.
Whether you own property in a hurricane-prone area or live in a hurricane-prone state, you may opt to include a hurricane deductible in your homeowners insurance policy. Even if your insurance company's policy doesn't feature a hurricane deductible, you can always purchase a rider that adds such coverage. However, it is important to recognize that hurricane deductibles add an extra cost of insurance that you should factor in when deciding how much coverage you will opt for and how much you are willing to pay for the premiums.
Given that hurricane deductibles increase the total cost of insurance, there is always the possibility of opting for other, more affordable hurricane- protection methods, like obtaining a flood insurance policy or a separate windstorm insurance policy in states where it's available. These policies may prove to be separate from your homeowner's policy and may include precise coverage for certain weather-related events, such as floods or winds.
Overall, hurricane deductibles are part of many homeowners' insurance policies in hurricane-prone states, and the amount of this deductible is subject to policy holders' specific policy coverage limit. As with any extra cost associated with insurance, it is important to both consider other alternatives to face the financial risk associated with frequent hurricane damage, as well as to factor in potential extra cost of a hurricane deductible in your insurance planning.