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Welcome to a new article series from Olympus Insurance. In October, we’re focusing on questions policyholders should be planning to ask their insurance agents, and that agents should be prepared to answer.
Our first topic is hurricane deductibles – as hurricane season enters its final (and often most intense) months, what can be done to protect policyholders from massive out-of-pocket costs in case of a catastrophic loss due to a hurricane? Here’s what Florida homeowners need to know.
Hurricane deductibles aren’t the same as the AOP deductible
Your hurricane deductible and your All Other Peril (AOP) deductible are completely different. A hurricane deductible applies only if your loss is caused by a storm categorized as such by the National Weather Service or the U.S. National Hurricane Center. An AOP deductible applies to all other types of claims unless no deductible is applicable to a covered loss.
Hurricane deductibles can be percentage-based or flat
Most homeowners HO3 insurance policies automatically come with a percentage-based deductible of 2%, 5% or 10% of the home’s insured value (Coverage A or Dwelling Value). Even a 2% deductible can mean a substantial up-front cost if your home suffers serious damage.
For example, if your home is insured for a value of $600,000, and a 2% deductible applies, you will have to cover the costs of repairs in the amount of $12,000 before the insurance coverage begins. Asking for a flat deductible of $500 or $1,000 only causes a tiny increase in your annual premium, and can protect you from catastrophic loss.
Hurricane deductibles only apply once per season
Your hurricane deductible doesn’t reset after each claim. If your hurricane deductible isn’t met after one hurricane claim, the next hurricane claim would have either the balance of the hurricane deductible or the AOP deductible (whichever is greater) applied.This means even if a hurricane only causes a small amount of damage, you should file a claim so your expenses out-of-pocket are applied to your annual hurricane deductible. If another hurricane hits in the same season, your deductible will already have been partially or fully met.
Hurricane insurance isn’t flood insurance
Even if flooding happens during a hurricane, it is considered as a separate peril, and must be insured separately with its own deductible. Standard homeowner HO3 policies don’t include flood coverage, but if you live in Florida, you live in a flood zone. Your premiums for flood coverage will be partially based on your level of risk, which is defined by current flood zone maps. Even if you live in a low or moderate risk flood zone, your chance of flood damage is five times greater than your chance of fire damage if you live in the state of Florida.
If you are buying or building a new home in Florida, you can use various tools to assess your risks for hurricane damage.
Not sure what your deductible is? Ask your agent today.
Next week: Pool screen enclosures.
This article is for informational purposes only and does not form a part of, replace, change or amend any terms, conditions, provisions or language within your Olympus Insurance policy. We encourage you to read your entire policy.