What Deductible Should You Choose for Hurricane Insurance?
Florida law allows insurers to charge a special hurricane deductible, which can differ from the deductible for your homeowner’s insurance policy. Like all deductibles, this number represents the amount of loss you will be responsible for before an insurer will send a check to cover repairs to your home.
Florida law requires that insurers offer certain deductible options. But which ones should you choose? Below, our Daytona Beach property damage lawyers look at the key considerations.
What Are the Options?
Florida law requires that the following deductibles be offered:
- Either 2%, 5%, or 10% of the policy limit, unless the amount is less than $500
For example, if your policy limit is $200,000, then you can choose $500, $4,000, $10,000, or $20,000. As you can see, this is quite a range.
There are some key exceptions to the rules listed above. You should know them before shopping for hurricane insurance.
For example, if your dwelling is insured for $250,000 or more, then the insurance company does not have to offer a $500 deductible. However, it must still offer a deductible of 2%, 5%, or 10%.
If the dwelling is insured with less than $500,000, then the company cannot offer any percentage in excess of 10%. However, the insured can execute a waiver of this, as provided in Fla. Stat. § 627.712(2)(a)1. The homeowner picks the dollar amount of the deductible, which can be more than 10%. If your home has a mortgage or lien, then the mortgagee must approve the election of a specific deductible.
What Deductible Should You Choose?
This is always a difficult question because there are many factors in play. You might assume that a low deductible is best, so you might choose the $500 option. Nevertheless, a lower deductible invariably means higher insurance premiums, which could cost you more money in the long run.
By contrast, choosing a higher deductible can lower your monthly premiums but could leave you in a bind if a storm does hit. Many people do not have thousands of dollars saved to contribute to home repair.
We recommend that homeowners choose a deductible that allows them to comfortably pay their insurance premiums while meeting other financial obligations. Look at your entire budget. There is no sense getting insurance if you cannot pay the premiums. If you stop paying, your coverage could lapse and be unavailable when you need it.
Remember to factor in the cost of any flood insurance you need to buy. Also take a look at your savings. If you have a $10,000 nest egg, you could tap this in the event a storm hits. If you have no savings, then a lower deductible might be preferable.
You should also consider how comfortable you are with risk. The fact is that a hurricane could strike any part of the state. Nevertheless, some consumers in the market for insurance can tolerate more risk than others, and they might choose a higher deductible to save on the cost of premiums.
Need Help Making a Property Damage Claim?
Following a hurricane or other storm, some insurers take their sweet time processing claims. For legal help, contact Bundza & Rodriguez today. We can be reached if you call 386-252-5170.