Florida's separate roof deductible

The separate roof deductible arrived with the May 2022 special session and is now standard exam material. Candidates lose points in three places: they take the greater of the two cap figures instead of the lesser, they forget the four situations where the deductible cannot be applied at all, and they credit the provision to the wrong bill.

Questions and answers, explained

All 8 questions above, with the correct answer and why it is correct. Everything here is on florida's separate roof deductible.

1. A personal lines residential policy includes the optional separate roof deductible. Coverage A is $500,000 and the cost to replace the roof is $30,000. Under s. 627.701, F.S., what is the largest roof deductible the insurer may apply?

   • A$15,000, one-half of the cost to replace the roof covering
   • B$25,000, 5 percent of the Coverage A limit of the policy
   • C$30,000, the full cost of replacing the damaged roof covering
   • D$10,000, 2 percent of the Coverage A limit of the policyCorrect

   Why: Section 627.701(10), F.S., created by SB 2-D, ch. 2022-268, in the May 2022 special session, lets an insurer offer a separate roof deductible but caps it at the LESSER of 2 percent of the Coverage A limit or 50 percent of the cost to replace the roof. Two percent of $500,000 is $10,000; 50 percent of $30,000 is $15,000; the lesser is $10,000. Option A is the near-miss for candidates who apply the right formula but take the greater of the two figures. Two conditions ride along with the option: the roof deductible may be applied only to a claim adjusted on a replacement cost basis under s. 627.701(10)(a)4., F.S., and the premium must include an actuarially sound credit or discount for it under s. 627.701(10)(a)3., F.S. Also memorize the four situations where the roof deductible does not apply at all: a total loss under the valued policy law, a roof loss resulting from a hurricane as defined in s. 627.4025(2)(c), F.S., a tree or other hazard that punctures the roof deck, and a repair of less than 50 percent of the roof. Watch the chapter law here, because study guides routinely credit this provision to the wrong bill: SB 2-A is ch. 2022-271 and does not appear in the history of s. 627.701 at all.

   Reference s. 627.701(10), F.S.

2. A Florida insurer has a filed and approved separate roof deductible on its homeowners program. A storm that the National Hurricane Center had declared a hurricane strips shingles from an insured's roof, and the adjuster determines that 80 percent of the roof must be replaced. May the insurer apply its roof deductible to this loss?

   • AYes, up to the lesser of 2 percent of Coverage A or 50 percent of the roof replacement cost.
   • BYes, but capped at 1 percent of Coverage A because more than half the roof is being replaced.
   • CNo. Florida law prohibits applying a roof deductible to a roof loss that results from a hurricane.Correct
   • DYes, and the hurricane deductible may also be applied to the same loss.

   Why: Section 627.701(10), F.S. authorizes a separate roof deductible on personal lines residential property insurance but fences it in tightly. The roof deductible may not exceed the lesser of 2 percent of the Coverage A limit of the policy or 50 percent of the cost to replace the roof, and it may be offered only under the conditions the statute lays out, including an actuarially sound premium credit. Critically, the statute lists situations in which the roof deductible may not be applied at all: a total loss to a primary structure under the valued policy law, a roof loss resulting from a hurricane, a roof loss resulting from a tree fall or other hazard that damages the roof and punctures the roof deck, and a roof loss requiring repair of less than 50 percent of the roof. Because the National Hurricane Center declared this storm a hurricane, the second exception controls and no roof deductible applies — the hurricane deductible does. Option D is also wrong on a separate point: when a roof deductible is applied, no other deductible under the policy may be applied to that loss or to any other loss to the property caused by the same covered peril.

   Reference s. 627.701(10), F.S.

3. A Florida personal lines residential policy insures the dwelling on a replacement cost basis and carries a separate roof deductible permitted by s. 627.701(10), F.S. A covered windstorm that is not a hurricane damages 70 percent of the roof surface. The insured has not yet paid the roof deductible. How may the insurer handle the roof portion of the claim?

   • AIt must pay full replacement cost on the roof at once, because a roof deductible cannot delay any payment.
   • BIt may deny the roof portion outright until the insured produces a paid-in-full receipt from a licensed roofer.
   • CIt must waive the roof deductible entirely, since the damage reaches more than half of the roof surface.
   • DIt may limit the roof payment to actual cash value until it receives reasonable proof the deductible was paid.Correct

   Why: Section 627.7011(3)(a) provides that where a roof deductible under s. 627.701(10) is applied to the insured loss, the insurer may limit the claim payment as to the roof to the actual cash value of the roof loss until it receives reasonable proof of payment by the policyholder of the roof deductible. The statute defines reasonable proof broadly: a canceled check, a money order receipt, a credit card statement, or a copy of an executed installment plan contract or other financing arrangement requiring full payment of the deductible over time. Option B fails on that definition, since the insured need not produce a paid-in-full roofing invoice and the roof portion is not denied, only held at actual cash value. Option C misreads the exceptions: the roof deductible does not apply to a loss requiring repair of less than 50 percent of the roof, and 70 percent is above that line, so the deductible stands. The other exceptions are a total loss under the valued policy law, a hurricane loss as defined in s. 627.4025(2)(c), and a roof punctured by a fallen tree or similar hazard. The roof deductible itself may not exceed the lesser of 2 percent of the Coverage A limit or 50 percent of the cost to replace the roof, and when it applies no other deductible may be applied to that loss.

   Reference s. 627.7011(3)(a), F.S.; s. 627.701(10), F.S.

4. An insurer notifies a homeowner that it will not renew her policy solely because the roof is 17 years old. The homeowner pays for an inspection by an authorized inspector, and the report states the roof has 6 years of useful life remaining. Under s. 627.7011, F.S., what may the insurer do?

   • ANonrenew anyway, because the roof is past the 15-year threshold in the statute
   • BNonrenew only after offering the insured a separate roof surcharge at renewal
   • CIt may not refuse to renew solely because of the age of that inspected roofCorrect
   • DNonrenew, but only after paying for a second inspection by its own inspector

   Why: Section 627.7011(5), F.S., protects roofs in two tiers. An insurer may not refuse to issue or refuse to renew a homeowner's policy on a structure whose roof is less than 15 years old solely because of the age of the roof. For a roof 15 years old or older, the homeowner may have the roof inspected by an authorized inspector before the insurer refuses coverage, and the insurer may not refuse to issue or renew solely because of roof age if the inspection indicates the roof has 5 or more years of useful life remaining. Option A is the tempting answer for candidates who learn only the 15-year figure and stop there — the inspection route is exactly what rescues an older roof. Note the protection is against refusal SOLELY for roof age; genuine condition problems or other underwriting reasons remain available to the insurer.

   Reference s. 627.7011(5), F.S.

5. An underwriter wants to non-renew a homeowners policy on a Bradenton house solely because the tile roof is 17 years old. The homeowner obtains an inspection from an authorized inspector concluding the roof has 7 years of useful life remaining. What does Florida law require of the insurer?

   • AThe insurer may non-renew; in Florida roof age is an unrestricted underwriting factor at any age.
   • BThe insurer may not refuse to renew solely for roof age, because the inspection shows 5 or more years of useful life.Correct
   • CThe insurer must renew the policy, but it may then impose a mandatory roof deductible of 10 percent of the Coverage A limit.
   • DThe insurer may non-renew unless the roof is less than 20 years of age at the time of renewal.

   Why: Section 627.7011, F.S. restricts roof-age underwriting in two steps. First, an insurer may not refuse to issue or refuse to renew a homeowner's insurance policy insuring a residential structure with a roof that is less than 15 years of age solely because of the age of the roof. Second, for a residential structure with a roof that is at least 15 years of age, the insurer must allow the homeowner to have a roof inspection performed by an authorized inspector before requiring replacement of the roof as a condition of issuing or renewing the policy, and may not refuse to issue or refuse to renew solely because of roof age if the inspection indicates the roof has 5 years or more of useful life remaining. This 17-year roof with a 7-year remaining useful life falls squarely in the second step, so a non-renewal grounded solely on roof age is not permitted. Option C is wrong on two counts: a roof deductible under s. 627.701(10), F.S. is capped at the lesser of 2 percent of Coverage A or 50 percent of the cost to replace the roof, and it is an offered option with a premium credit, not something imposed unilaterally.

   Reference s. 627.7011, F.S.; s. 627.701(10), F.S.

6. An insurer refuses to write a homeowner's policy because the roof is 17 years old. An inspection performed by an authorized inspector shows the roof has 7 years of useful life remaining. Is the refusal lawful?

   • AYes, an insurer may decline any risk whose roof has passed its fifteenth year
   • BYes, but only if the insurer first offers the applicant a separate roof deductible
   • CNo, the inspection shows 5 or more years of useful life, so roof age alone cannot bar itCorrect
   • DNo, Florida law forbids any roof-age underwriting rule on owner-occupied dwellings

   Why: Section 627.7011(5), F.S., added by SB 2-D (ch. 2022-268, Laws of Fla.) and applicable to policies issued or renewed on or after July 1, 2022, restricts roof-age underwriting in two steps. Do not credit it to SB 2-A (ch. 2022-271), which carried the litigation and claim-deadline reforms. First, an insurer may not refuse to issue or renew a homeowner's policy solely because the dwelling has a roof less than 15 years old. Second, for a roof 15 years old or older, the applicant may obtain an inspection before the insurer requires replacement as a condition of coverage, and if the inspection indicates the roof has 5 years or more of useful life remaining, the insurer may not refuse to issue or renew solely because of roof age. Option A states the correct starting fact — this roof is over 15 — but stops before the inspection rule that decides the case. Option D overstates the protection: roof age can still support a declination when the inspection shows less than 5 years of life left.

   Reference s. 627.7011(5), F.S.

7. A personal lines residential policy contains a separate roof deductible. Which statement about that deductible is correct under Florida law?

   • AIt may not exceed 10 percent of Coverage A and applies to every claim touching the roof
   • BIt may not exceed the lesser of 2 percent of Coverage A or half the roof replacement costCorrect
   • CIt applies to hurricane losses in place of the separate hurricane deductible otherwise due
   • DIt is prohibited on any owner-occupied dwelling insured for more than $250,000 of coverage

   Why: Section 627.701(10)(a), F.S., created by SB 2-D (ch. 2022-268, Laws of Fla., May 2022 Special Session D) and not by SB 2-A, lets an insurer offer a separate roof deductible of up to but not exceeding the lesser of 2 percent of the Coverage A limit or 50 percent of the cost to replace the roof. The same paragraph carves out several situations where the roof deductible may not be applied at all: a total loss to the primary structure caused by a covered peril, a roof loss caused by a tree fall or other hazard that damages the roof and punctures the roof deck, a repair of less than 50 percent of the roof, and — the point option C gets backwards — a loss covered by the policy's hurricane deductible. Option A recycles the 10 percent figure from the menu of hurricane deductibles under s. 627.701(3), which is a different deductible entirely.

   Reference s. 627.701(10), F.S.

8. A personal lines residential policy carries a separate roof deductible that the insured did not opt out of. A hurricane tears off a large section of the roof covering, and the insured files a claim. Which statement is correct under s. 627.701, F.S.?

   • AThe roof deductible applies, capped at 5 percent of the Coverage A limit
   • BThe roof deductible applies on top of the hurricane deductible for this loss
   • CThe roof deductible does not apply, because the roof loss came from a hurricaneCorrect
   • DThe roof deductible does not apply, since she never signed the required opt-out form

   Why: Section 627.701(10), F.S., created by SB 2-A in the December 2022 special session, lets an insurer offer a separate roof deductible, but it expressly forbids applying that deductible to four categories: a roof loss resulting from a hurricane, a total loss to the primary structure caused by a covered peril under the valued policy law, a roof loss caused by a tree fall or other hazard that damages the roof and punctures the roof deck, and a roof loss requiring the repair of less than 50 percent of the roof. A hurricane roof loss is squarely on that list. Option B fails on a second rule in the same subsection: when the roof deductible does apply, no other deductible under the policy may be applied to that loss. The cap is the lesser of 2 percent of the Coverage A limit or 50 percent of the cost to replace the roof, not 5 percent. Option D describes a real right — the policyholder may reject the roof deductible by signing an office-approved form — but her failure to sign it is what left the deductible in the policy, not what defeats it.

   Reference s. 627.701(10), F.S.

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