Ryan Insurance & Financial Services
by Sean Ryan on Dec 14, 2016
After Hurricane Matthew tore through Florida in October, many homeowners were dismayed to discover that they had a 5 percent hurricane deductible. On a home insured for $200,000, that’s $10,000. Damages on most homes fell below that threshold, meaning the homeowners had to pay for all the damages out of their pockets.
A hurricane deductible is the amount a homeowner must pay before insurance kicks in. Most are based on a percentage of the home’s insured value rather than a dollar amount. Insurers in Florida offer hurricane deductibles that vary between of $500, 2 percent, 5 percent and 10 percent of the covered amount of the property. Of course, the higher the deductible, the lower the premium.
Hurricane deductibles were introduced after Hurricane Andrew devastated South Florida in 1992, causing $26 billion in damage. Insurers saw the need to require policyholders to share some of the cost so they could continue to insure coastal homes and businesses.
You can save money on your insurance premium by increasing your deductible. But this is a gamble that may not pay off. If you have significant hurricane damage, you will be stuck paying a hefty amount. When selecting your deductible, make sure you can afford a large cash payout.
On the other hand, if you have a home that was built under the latest code and has sturdy hurricane shutters, you may want to consider lowering your deductible, perhaps all the way down to $500. Although your premium will go up a bit, you’ll have peace of mind knowing that the bulk of any future damages will be covered by insurance.
If you don’t know what your hurricane deductible is, pull out your policy. You’ll see the dollar value displayed prominently on the declaration page.
If you have questions, call Ryan Insurance at 386-738-2000. Our insurance professionals will review your current policy, check the offerings at various insurance companies, and make recommendations that fit your unique needs.