Insurance can sometimes be complicated and hard to understand. In our “Diving Deep” series we explore sometimes forgotten or misunderstood coverages to help you better understand their application. This specific series is focusing on one of the most commonly misunderstood aspects of property and business insurance – deductibles. Now, while most people understand what a deductible is and how it is used by insurance companies, most do not fully understand the nuanced differences between the types of deductibles offered. In this series we will focus on the following deductibles and how they differ from your “AOP” or All Other Perils deductible – wind/hail deductible, named storm deductible, and hurricane deductible.
Before we jump into what a hurricane deductible is and how it differs from other types of deductibles, I want to repeat something from the last few blogs… the percentage deductible is based on the value of your building and not the value of your loss. Now that we’ve cleared that up, let’s dive into how a hurricane deductible applies!
As defined under the coverage form, a hurricane “is a storm system that has been declared to be a hurricane by the National Hurricane Center of the National Weather Service... If a windstorm is not declared to be a hurricane and there is loss or damage by windstorm the applicable deductible is the same deductible that applies to Fire.” This is a very specific and narrow definition of what a hurricane is. As previously mentioned this is one of the few times that restrictive wording is to the benefit of you, the insured. This is because of the second part of the above quote declaring that a windstorm loss deemed not to be a “hurricane” will apply the Fire deductible. As was mentioned in previous blogs, this is also known as your All Other Perils (AOP) deductible which is, generally speaking, significantly less than any of the percentage deductibles we’ve discussed in this series.
You can also obtain this deductible in the form of a calendar year versus an occurrence. In a state like Florida where we’ve seen over 25 storms just this year threaten our coastline, this could not be more important. What the calendar year deductible says is that if you have multiple storms that cause covered losses during your policy term, the deductible will only be applied once. Once you’ve reached your hurricane calendar year deductible the insurance company will pay for the entirety of the covered losses coming from hurricanes as defined by the form through the end of your policy term. Talk about savings!
It is our hope that you’ve learned a bit more about the various deductible types offered for property insurance and can see the benefits and downfalls of each. If you would like to learn more about this topic, please reach out to us as we’d love to schedule time to answer your questions. Thanks for reading and stay tuned for the next “Diving Deep” series coming soon!
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Written by Robbie Korth
If you have any questions, please feel free to contact Robbie Korth at firstname.lastname@example.org