Home Insurance Deductibles
Welcome to Florida! As my dad likes to say, "you can get to heaven from anywhere, but you don't notice the change in scenery near as much when you leave from Florida"! If you are a recent transplant or maybe just a first time home buyer here in the Sunshine State, its important to understand the unique features of your Florida home insurance policy.
While reviewing your home insurance policy one of the first things you will notice is that you have two deductibles; One is for your All Other Perils (AOP) deductible and the other is your hurricane deductible which is more than likely shown as a percentage amount on your policy. Again, if you are moving from another state, the hurricane deductible may be something you aren't used to seeing. Let's discuss your AOP deductible first as this is the deductible most people are familiar with. This is the deductible that you as the homeowner are responsible to pay when a claim occurs that is not hurricane related. Examples might be a fire, lightning, vandalism or theft. Most Florida home insurance policies nowadays come standard with either a 1,000 deductible or a 2,500 deductible (we will discuss the pro's and con's of different deductible amounts in another article). Again, this is the amount that you as the homeowner must pay at the time of a loss for claims not related to hurricanes. The insurance company will then pay the remaining balance left on the covered claim.
The second deductible that you will notice is your hurricane deductible. This is the amount that you as a homeowner must pay for damages to your home that are directly related to hurricane damage. This deductible is typically shown as a 2%, 5% or 10% in your homeowners declarations pages. This is a percentage deductible of your dwelling amount (Coverage A), NOT of the claim itself. For example, if your dwelling amount was 230,000 and your hurricane deductible was 2% you would have a hurricane deductible of $4,600.00. Therefore, if the damage sustained as a result of a hurricane was only $2,000.00 the claim would not be covered. Often times clients get confused and think that it is a percentage of the claim itself, but it isn't.
If your home has a mortgage on it you may need to check with your lender prior to making any changes to your deductibles as some lenders will not allow you to increase your deductibles past a certain limit. Obviously, if you do not have a mortgage on your home you can pick what ever deductibles you feel most comfortable with. Keep in mind that a higher deductible will decrease your premium, while a lower deductible will increase your premium. Vice versa, If you have a lower deductible you will pay out less at the time of a claim, however, if you have a higher deductible you will pay out more at the time of a claim.
In closing, it is always a good idea to consult with your local independent agent prior to making any changes to your policy.