A Hurricane Deductible? What Is That?

Posted on April 9, 2020


Hayden Haskins | author

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ICHQ | Site Author

Most people understand that there are deductibles required as part of their insurance policies. A deductible is an amount the insured person will pay before the insurance carrier will cover any expenses. However, some people may not understand there is something called “hurricane deductible.” At Insurance Claim HQ, our New Orleans bad faith insurance attorneys want to discuss what this is and how it differs from a regular deductible. 

Did you know about the hurricane deductible?

The standard homeowner’s insurance deductible typically ranges between $500 and $2,000. This is the amount of money that the insured person must pay before their insurance carrier will cover expenses for damages covered under their policy. However, insurance companies also have something called an “all peril” deductible. In our area, this is commonly referred to as the “hurricane deductible.”

These deductibles will generally kick in when a storm has been named, and they differ from the typical deductible under the insurance policy. Typically, a hurricane deductible ranges from between 2% and 5% of the insured person’s property value. For example, if a home is valued at $200,000 and has a 5% hurricane deductible, then the policyholder will pay $10,000 in out-of-pocket costs before their insurance coverage takes effect. 

This hurricane deductible came to a forefront last year when Louisiana Insurance Commissioner James Donelon issued a cease and desist order against State Farm in a dispute over their hurricane deductibles before hurricane Barry.

In that case, the Department of Insurance received a complaint from a policyholder who said that State Farm was requiring a hurricane deductible for losses that occurred before the storm was declared a hurricane. The insurance carrier was trying to impose the higher deductible on the policyholder losses, and Donelon said that State Farm’s interpretation of the policy “ignores the irregular, but relevant aspects associated with the development of the Barry storm event prior to its designation as a hurricane.”

Contact an experienced team today

If you or somebody you care about is confused about your deductible after a named storm is on the way or strikes the area, seek legal assistance immediately. At Insurance Claim HQ, our skilled and experienced team will help you get through this. Our goal is to ensure you are treated fairly by your insurer at all times. You can contact our New Orleans bad faith insurance attorney for a free consultation of your case today.