$500, $1000, $2500, 3% Wind, 5% named storm, what is my true deductible?

There seems to be more an more confusion about deductibles on home insurance.  Different companies have put different thresholds for wind and hurricane deductibles in New York.  Many homeowners have no idea of how much they would have to pay if they had damage in a severe windstorm, Nor'easter, or Hurricane.

Deductibles, what are they?

First let's start with what is a deductible.  It is the amount of money that you would be responsible to pay before a claim is paid by your insurance.  Most people have a $500 or $1000 deductible.  If you have less than that, you are probably paying too much for your insurance.  You can usually save $100 a year if you go from a $250 deductible to a $500.  So if you have a claim, you pay the first $500 instead of $250, so you will save the difference if you go three years without a claim.  In many cases, it doesn't save enough to go over a $1000 deductible on a home policy.

Wind & Hail Versus Named Storm

After Hurricanes Andrew, Katrina, and Rita, many companies realized that they couldn't handle the volume of claims without greatly increasing the cost of home insurance policies.  Many companies put a named Hurricane deductible in place. They all have different thresholds as to when they come in, so there could be large differences in the premiums.  The percentage can be from anywhere between 2% and 5%.

For example, Allstate Insurance Company and State Farm Insurance Company both have a 5% Named Storm, or Hurricane deductible.  The Allstate Deductible starts when there is a named storm with sustained winds of 100mph for a certain period of time.  The State Farm deductible is for ANY Hurricane.  You might be able to save $100 a year with the State Farm policy, but if a normal Hurricane does damage with winds of 75mph, you will have to pay 5% of the insured value versus your normal $500 Deductible.

Insured Value            State Farm Ded.                  Allstate Ded.

$300,000                      $15,000                                $500

Other companies have an even more stringent deductible and apply it to ALL Wind Storms.  The percentages are usually less, 2-3%, but they are in effect for any storm, depending on the threshold on your policy.  So in the example above, it could be a Nor'easter with 75mph winds, and the deductible would be $6,000 to $9,000, where the above companies would be the normal $500 deductibles.  Some companies have the deductible with no threshold, so you are responsible for any wind claims below the deductible.

What do I do?

Unfortunately, unless you know how to read the details of your policy, you might not know what your deductible is until you have a claim.  Some are clearly written, but others are buried in the endorsements section of your policy.  Currently the Professional Insurance Agents Association, and the State Insurance Department are looking to standardize the deductibles, but you need to do something before Hurricane Season starts.

Fax, mail, or email me your policy, and I will help you determine what your deductible is, so you can be prepared.  We work with companies with that have low Hurricane Deductibles with High Thresholds.  They also have great rates.  Happy Spring Everyone.