Wind/hurricane coverage

A named storm deductible is not your normal deductible

Most property policies have one standard deductible that applies to any covered loss. Some policies also carry a second, separate deductible that only kicks in once a storm has an official name, and it is usually written as a percentage of the insured value rather than a flat dollar figure.

"Some insurance policies have a special deductible for losses caused by named storms, like hurricanes...This deductible is separate and different from the normal deductible in a homeowners policy."

Source: What Are Named Storm Deductibles?, National Association of Insurance Commissioners (NAIC)

Percentages typically range from 1 to 10 percent of the insured value, and the deductible only applies once a storm has been officially named, not to every wind claim.

Whether one applies to you depends on your state

Named storm deductibles are not universal. NAIC identifies named storm or hurricane deductibles as existing in some form in Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, Virginia, and the District of Columbia. If your state is not on that list, or even if it is, check your own state's insurance code and your own declarations page rather than assuming this mechanism does or does not apply to your association.

Florida spells out the mechanics in unusual detail

This lesson only confirmed these specific mechanics for Florida; other named storm states almost certainly regulate disclosure differently, so treat this as an illustration of how detailed the rules can get, not a national standard.

"prior to issuing a personal lines residential property insurance policy, the insurer must offer alternative deductible amounts applicable to hurricane losses equal to $500, 2 percent, 5 percent, and 10 percent...THIS POLICY CONTAINS A SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU."

Source: Florida Statutes §627.701, The Florida Senate

Florida also requires the insurer to convert that percentage into an actual dollar figure on the declarations page, both when the policy is issued and at each renewal, so a Florida board never has to do that math itself.

Ask for the dollar number before storm season, not after

A percentage sounds small until it is multiplied by a large insured value. NAIC illustrates the math with a single family example: a 5 percent deductible on a $300,000 insured home produces $15,000 out of pocket before the policy pays anything. Apply that same percentage math to an association's much larger insured value, and the gap between "we have coverage" and "we can afford our own deductible" gets wide fast. Ask your broker to state the deductible in dollars, not just percent, and bring that number into your reserve and special assessment planning before hurricane season, not after a storm.