The Cost of Hurricane Insurance Deductibles in Florida
With the onset of hurricane season, Florida residents face concerns about their homeowner’s insurance policies in preparation for the possible storms and the financial challenges that can follow. The National Oceanic and Atmospheric Administration (NOAA) predicts a 2014 hurricane season that is near or below normal for the number of anticipated storms, which calls for three to six hurricanes and one or two major hurricanes between now and the end of November. However, a relatively inactive season does not discount the economic risk. It only takes one storm to cause extensive damages and potentially place you in a dispute with your insurance company regarding payment of your damage claims.
A recent report by Bankrate, Inc. discusses the difficult issue of large deductibles hidden within insurance policies. According to the article, this practice dates back to 1992, when damages from Hurricane Andrew resulted in a $15.5 billion bill for insurance companies. As a result, insurance agencies began adding a percentage-based hurricane deductible, on top of the standard claim deductible. For example, if you have a $200,000 insurance policy, with a standard $1000 deductible and a 5% hurricane deductible, you are responsible for a total deductible of $11,000 for hurricane damages. The practice is done in 19 U.S. states along and near the eastern seaboard.
What You Should Know About Hurricane Deductibles
- Generally, the deductible only applies for named hurricanes. It is triggered when the National Weather Service declares that a storm has reached hurricane level intensity;
- Tropical storms do not trigger hurricane deductibles, even very serious ones like Tropical Storm Sandy, which affected the east coast in 2012;
- Insurance companies claim the deductibles keep coastal property insurance affordable and available to purchasers, by placing more of the damage risk with the homeowner;
- Details vary by state. In North Carolina, companies utilize a named storm deductible, instead of a hurricane deductible. This expands the amount of possible triggers for the policy.
The state of Florida mandates that hurricane deductibles apply to the entire year, not individual storms. If multiple storms occur in a single season, the homeowner cannot be charged an additional hurricane deductible. However, even with homeowner assistance from state legislatures, policyholders often find themselves in dispute with insurance companies over payment of claims. According to a report in the Insurance Journal, Tropical Storm Sandy highlighted the problems that can occur around damaging storms. Though New York Governor Andrew Cuomo declared that the hurricane deductible was not triggered by the storm, some insurance companies attempted to enforce it anyway.
When insurance disputes occur, Florida homeowners may choose to file a complaint with the Florida Office of Insurance Regulation and file a complaint with the courts to force payment of insurance claims. These cases are extremely challenging for plaintiffs and insurance companies employ numerous lawyers. It is vital for plaintiffs to secure the assistance of experienced lawyers.