Too few understand hurricane deductibles

What are hurricane deductibles and how do they work?

Homeowners in New Jersey, North Carolina, South Carolina, Florida and Texas were asked this question in an online survey conducted on behalf of the Insurance Research Council (IRC).

Not only did one-third of respondents say they had never heard of these deductibles or were not sure what they were, one quarter of them lacked an understanding of deductibles in general, the IRC poll found.

From the Insurance Information Institute: “Deductibles have been an essential part of the insurance contract for many years and represent a sharing of the risk between the insurance company and the policyholder. When repairing your home or replacing personal possessions, the amount of the deductible would come out of your own pocket.”

Hurricane deductibles demystified by the InsuringFlorida blog here: “You have two deductibles on your homeowners insurance: one is for hurricanes and the other is for everything else. The “everything else” deductible is for things like a fire, lightning strike or water damage, to name a few. It is usually a flat dollar amount, such as $1,000. The hurricane deductible is, obviously, for hurricanes – and for homes valued over $100,000, it starts at 2 percent of what the home is insured for, which is what it would cost to rebuild it. So, if the house is insured for $250,000, a 2 percent deductible would be $5,000.”

More on hurricane and named storm deductibles from the National Association of Insurance Commissioners (NAIC) website.

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