Everybody who purchases a homeowners insurance policy is familiar with the deductible — the amount of money you must pay out of pocket for repairs before your coverage kicks in.
However, some people are surprised to learn that many policies come with a separate hurricane deductible. Sometimes called a named-storm deductible, this type of deductible applies to all damage caused by named storms, such as tropical storms and hurricanes.
This type of deductible is separate from the standard deductible on your homeowners policy, and it can be quite a bit costlier for the policyholder. Hurricane deductibles typically are based on a percentage of a home’s value.
For example, a hurricane deductible set at 5% of a home insured for $300,000 would be $15,000, leaving the homeowner with much higher out-of-pocket costs than he or she would pay with a standard homeowners policy deductible.
Hurricane deductibles can range from about 1% to 10% of the value of the insured home, according to the National Association of Insurance Commissioners. Some hurricane deductibles can be set at a fixed-dollar amount instead of a percentage of the home value.
Because hurricane deductibles can be so costly for the homeowner, you probably want to know which states have these deductibles. As you might guess, they are concentrated in states along the East Coast and Gulf Coast. The 19 states — plus the District of Columbia — with hurricane deductibles are:
- District of Columbia
- New Jersey
- New York
- North Carolina
- Rhode Island
- South Carolina
The Insurance Information Institute offers more details on the specifics of hurricane deductibles in these 19 states and D.C.
Some other states also may allow insurers to include hurricane deductibles in their policies, so it is important to contact your state’s department of insurance to find out exactly what is and is not allowed.
For ways to lower your home insurance costs, check out “How to Get the Best Deal on Homeowners Insurance.”