While there is an exception to almost every rule, the “general rule” is
that Florida residential insurance policies (that would include homes,
residential condominium associations, homeowners associations, and residential
apartments) have a separate deductible that applies to losses occurring during
a hurricane. Therefore, most residential policies have an “all other peril” (AOP)
deductible for losses caused by perils such as fire, lightening, and theft, and
a separate deductible for hurricane losses. The hurricane deductible is
mandated by Florida statutes.
The hurricane deductible is expressed as a percentage, typically two
percent, but higher percentages are available. The percentage is a percentage
of the coverage amount, not a percentage of the loss. For example, a structure
insured for $400,000 with a two-percent deductible would have a deductible of
$8,000 for damage caused by a hurricane.
The hurricane deductible applies only for a hurricane as defined in the
statutes. According to Florida Statute 627.4025, a hurricane means a storm
system that has been declared a “hurricane” by the National Hurricane Center of
the National Weather Service. Note that a named tropical storm does not trigger
the hurricane deductible.
According to the statutes, the duration of a hurricane in which the hurricane
deductible would apply includes the time period:
- Beginning at the time a hurricane watch or warning is issued for any
part of Florida by the National Hurricane Center.
- Continuing for the time period during which the hurricane conditions
exist anywhere in Florida; and
- Ending 72 hours following the termination of the last hurricane watch
or hurricane warning issued for any part of Florida by the National Hurricane
To summarize, to trigger the hurricane deductible there must first be a
named hurricane. Then, a hurricane watch or warning must be issued for any part
of Florida. There have been situations when these conditions did not exist and
some carriers incorrectly applied a hurricane deductible. For example, in 2013,
Tropical Storm Karen formed October 3. Simultaneous with the National Hurricane
Center naming Karen as a tropical storm, the center issued a hurricane watch
and warning for parts of Florida, anticipating that Karen would likely become a
hurricane. Karen was never declared to be a hurricane. As such, wind damage
caused by Karen was not subject to the hurricane deductible; the AOP deductible
The deductible applies on a calendar-year basis. (For commercial
residential policies such as a condominium association policy, the customer can
select either a hurricane deductible on a calendar-year basis or a hurricane
deductible that applies to each hurricane.) Using the earlier example of the
$8,000 hurricane deductible, that $8,000 applies for all losses during the
calendar year for losses due to hurricanes.
For example, in 2004 some areas of Florida were hit by three major
hurricanes in about 40 days. This calendar year deductible applies only if the
customer was insured by the same company (or group of companies if an insurer
has multiple companies) during all hurricanes. Assume that a hurricane causes
$40,000 in damage; the claim is paid less the $8,000 deductible. If there is a
second hurricane during the calendar year, the $8,000 hurricane deductible does
not apply; instead the AOP deductible applies.
In a different example, suppose that the first hurricane causes damage
of only $3,000. Due to the $8,000 deductible, nothing is paid. If a second
hurricane were to cause $35,000 in damage, the claim is paid less a $5,000
deductible ($8,000 hurricane deductible less the $3,000 that applied for the
first hurricane, leaving $5,000 deductible). If a third hurricane were to cause
damage in the same calendar year, the AOP deductible would apply. Many, if not
most, insurance policies require that the customer report all hurricane losses,
even those that are clearly below the deductible. Failing to do so could result
in the full application of the hurricane deductible for second and subsequent
There are other key points to keep in mind:
- Policies are different; it’s key to read the specific policy in
question to see how deductibles are structured.
- The statute dealing with hurricane deductibles applies only to
“admitted” insurers; it does not apply to surplus lines insurers. While surplus
lines insurers typically also use a hurricane deductible, they are not required
to do so.
- Wind damage that is not associated with a hurricane (such as a tornado
or summer thunderstorm) is not subject to a hurricane deductible. An insurance
company may, however, issue a policy with a separate “windstorm” deductible
that would apply to wind losses not due to a hurricane as long as the
deductible was approved by the Florida Office of Insurance Regulation.
- Hurricane deductibles on policies typically can only be changed at the
renewal date of the policy.
- Commercial non-residential policies (for example policies covering a
hotel or office building) are not required by the statutes to have a separate
hurricane deductible. If an insured desired to use a hurricane deductible for
these type of structures, she would be free to do so as long as it was approved
by the Florida Office of Insurance Regulation.
- Florida Statute 627.701
contains the information on deductibles; F.S. 627.4025 defines
"hurricane" and "hurricane coverage."