Florida's hurricane deductible

This is the most heavily tested Florida-specific number on the 2-20, and almost every wrong answer comes from treating the hurricane deductible like an ordinary one. It is not a per-claim subtraction from the loss. It is a percentage of the Coverage A dwelling limit, it runs on a calendar year rather than per storm, and the storm window it applies to is defined by statute rather than by the weather.

Questions and answers, explained

All 12 questions above, with the correct answer and why it is correct. Everything here is on florida's hurricane deductible.

1. A personal residential policy carries a 2 percent hurricane deductible on a $300,000 dwelling limit and a $1,000 all-other-perils deductible. Hurricane Ana strikes in August and the full $6,000 hurricane deductible is applied to that loss. Hurricane Beryl strikes in October of the same calendar year, causing $15,000 in damage. What deductible applies to the second loss?

   • AA second full $6,000 hurricane deductible, because each named hurricane is a separate occurrence
   • BNo deductible at all, because the hurricane deductible for the calendar year is already exhausted
   • CThe $1,000 all-other-perils deductible, which is the greater remaining figureCorrect
   • D$3,000, one-half of the hurricane deductible, under the second-event rule

   Why: Section 627.701, F.S., applies the hurricane deductible on a calendar-year basis to all covered hurricane losses that occur during that year, rather than per occurrence. Once the hurricane deductible has been absorbed by an earlier hurricane in the same calendar year, the insurer may apply to a subsequent hurricane a deductible equal to the greater of the remaining amount of the hurricane deductible or the amount of the deductible that applies to perils other than hurricane. Here nothing remains of the $6,000, so the $1,000 all-other-perils deductible is the greater figure and controls. Option B is the trap — the annual application reduces the deductible, but it does not eliminate a deductible entirely.

   Reference s. 627.701, F.S.

2. Before issuing a personal lines residential property policy on a Pensacola home with $300,000 of dwelling coverage, which set of hurricane deductible options must the insurer offer the applicant?

   • A$500, $1,000, $2,500 and 5 percent of the dwelling limit
   • B1 percent, 2 percent, 5 percent and 10 percent of the dwelling limit
   • C2 percent, 5 percent and 10 percent of the dwelling limitCorrect
   • DA flat 2 percent, which is the statutory hurricane deductible in Florida

   Why: Section 627.701(3), F.S. requires an insurer, prior to issuing a personal lines residential property policy, to offer alternative hurricane deductibles of $500, 2 percent, 5 percent and 10 percent of the policy dwelling limits, unless the percentage deductible would be less than $500. The statute relieves the insurer of the obligation to offer the $500 option where the policy dwelling limit is $250,000 or more, so at $300,000 the required offer is the 2, 5 and 10 percent set. The statute also lets an insurer offer 3 percent instead of 2 percent where dwelling limits are $1 million or more but less than $3 million, and it does not require the 2 percent option where dwelling limits are $3 million or more. The written notice of the offer must specify which hurricane deductible applies if the applicant does not affirmatively choose one, and the insurer must give notice of the available amounts at each renewal. Option B is the classic trap: 1, 2, 5 and 10 percent are the sinkhole loss deductible options under s. 627.706, F.S., not the hurricane options. There is no single statutory hurricane deductible, so D is wrong.

   Reference s. 627.701(3), F.S.

3. During a hurricane, wind strips shingles from an insured Naples home and tears an opening in the roof deck. Rain driven through that opening soaks the ceilings and hardwood floors below. The homeowners policy covers windstorm but excludes damage from rain unless a covered peril first creates an opening in the roof or wall. How is the interior damage treated?

   • ANot covered — rain, not wind, was the direct physical cause of the damage to the ceilings and floors.
   • BNot covered under the homeowners policy — wind-driven rain entering a structure is treated as flood and is payable only under an NFIP policy.
   • CCovered, but subject to the all-other-perils deductible, because interior water damage is not itself a windstorm loss.
   • DCovered as part of the hurricane loss, subject to the hurricane deductible, because windstorm was the proximate cause and first created the opening.Correct

   Why: Proximate cause is the unbroken chain of events set in motion by the initial peril. Wind, a covered peril, created the opening, and the rain damage flowed directly from it, so the whole loss is a windstorm loss. Florida's definition of hurricane coverage in s. 627.4025(2)(a) expressly includes ensuing damage to the interior of a building caused by rain when the force of the windstorm first damages the building and creates an opening. Because the loss occurred during the statutory hurricane occurrence, the hurricane deductible — not the all-other-perils deductible — applies to the entire loss, interior and exterior.

   Reference s. 627.4025(2)(a), F.S. (hurricane coverage includes ensuing interior rain damage); general P&C concept — proximate cause

4. A neighboring volunteer fire district responds to a kitchen fire at an insured Florida home that sits outside that district's limits, and bills the owner $900 under the service agreement she signed with the district. Her unendorsed HO-3 carries a $2,500 all-other-perils deductible. What does the policy pay toward that bill?

   • ANothing, because the $900 charge falls below the policy's $2,500 all-other-perils deductible amount.
   • BUp to $500 as an additional amount of insurance, and no deductible applies to this coverage.Correct
   • CThe full $900, but only after the insured satisfies the all-other-perils deductible on the fire loss.
   • DNothing, because the form excludes charges billed by the district that furnishes the fire response.

   Why: The Fire Department Service Charge additional coverage in the ISO homeowners form pays up to $500 for the insured's liability, assumed by contract or agreement, for service charges incurred when the fire department is called to save or protect covered property from a Peril Insured Against. Two limits decide the item and both are satisfied here. First, the liability must be assumed by contract or agreement, and she signed a service agreement with the district; a charge imposed purely by a service-charge ordinance is liability imposed by law and falls outside the grant. Second, the form does not cover the charge if the property is located within the limits of the city, municipality or protection district furnishing the response — this home sits outside the responding district, which is why D fails. The form calls the coverage an additional amount of insurance and states that no deductible applies to it, so A is the trap for candidates who apply the all-other-perils deductible reflexively; the insured absorbs only the $400 above the $500 sublimit.

   Reference ISO HO-3 (HO 00 03 05 11), Section I — Property Coverages, E. Additional Coverages, 4. Fire Department Service Charge

5. The National Hurricane Center issues a hurricane watch covering part of Florida at 6 a.m. Monday and upgrades it to a hurricane warning at 6 p.m. Monday. The last hurricane watch or warning for any part of the state terminates at 8 a.m. Thursday. Wind-driven debris damages an insured's roof at 5 a.m. Saturday. Under s. 627.4025, F.S., when does the duration of the hurricane end?

   • AAt 8 a.m. Thursday, when the last watch or warning for the state terminated
   • BAt 8 a.m. Sunday, 72 hours after the last watch or warning terminatedCorrect
   • CWhen the storm is downgraded below hurricane strength by the Hurricane Center
   • DAt 8 a.m. Friday, 24 hours after the last watch or warning was terminated

   Why: Section 627.4025(2)(c), F.S., defines the duration of a hurricane. As rewritten by ch. 2023-130, Laws of Florida, that duration begins at the time a hurricane WARNING is issued for any part of Florida by the National Hurricane Center, and it ends 72 hours following the termination of the last hurricane watch or hurricane warning issued for any part of Florida. Two asymmetries do the work here. The duration starts on a warning only, so a watch alone no longer begins it, which is why the stem supplies the Monday evening upgrade. But it ends 72 hours after the last watch OR warning, whichever runs later. Thursday 8 a.m. plus 72 hours puts the end at Sunday 8 a.m., so the Saturday damage falls inside the hurricane and the hurricane deductible, not the all-other-perils deductible, applies. Option A is the natural but wrong instinct: termination of the watch or warning does not end the hurricane, and that 72-hour tail is precisely what pulls late wind damage into the hurricane deductible. Older manuals still print a watch-or-warning start trigger and a clause continuing the duration for as long as hurricane conditions exist anywhere in Florida; ch. 2023-130 deleted both.

   Reference s. 627.4025(2)(c), F.S.

6. A Fort Pierce homeowner carries $400,000 of dwelling coverage with a 2 percent hurricane deductible, or $8,000, and a $1,000 all-other-perils deductible. In July, Hurricane Alma causes $50,000 of damage; the insurer applies the full $8,000 hurricane deductible and pays the balance. In September of the same calendar year, Hurricane Bruno causes $30,000 of new damage under the same policy. What deductible may the insurer apply to the second loss?

   • AA fresh $8,000 hurricane deductible, because each named hurricane is a separate occurrence
   • BThe greater of the remaining hurricane deductible, which is zero, or the all-other-perils deductible, so $1,000Correct
   • CNo deductible of any kind, because the hurricane deductible has been exhausted for the calendar year
   • DHalf the hurricane deductible, or $4,000, prorated because two hurricanes occurred in the same season

   Why: Section 627.701(5)(a), F.S. provides that the hurricane deductible applies on an annual basis to all covered hurricane losses that occur during the calendar year under one or more policies issued by the same insurer or an insurer in the same insurer group. The statute then specifies the mechanics for a later storm: if there was a hurricane loss for a prior hurricane or hurricanes during the calendar year, the insurer may apply to a subsequent hurricane a deductible that is the greater of the remaining amount of the hurricane deductible or the amount of the deductible that applies to perils other than a hurricane. Here the $8,000 was fully consumed by Alma, so the remaining hurricane deductible is zero and the greater figure is the $1,000 all-other-perils deductible. Option A describes the per-occurrence approach the statute was written to prevent, and option C overreads the rule — exhausting the hurricane deductible does not make later losses deductible-free.

   Reference s. 627.701(5)(a), F.S.

7. A Florida homeowners policy has a Coverage A dwelling limit of $400,000, a 2% hurricane deductible, and a $1,000 all-other-perils deductible. A hurricane causes $52,000 of covered damage to the dwelling. How much will the insurer pay?

   • A$50,960
   • B$44,000Correct
   • C$51,000
   • D$32,000

   Why: A percentage hurricane deductible is calculated on the Coverage A dwelling limit, not on the amount of the loss: $400,000 x 2% = $8,000. The insurer pays $52,000 - $8,000 = $44,000. Choice A wrongly takes 2% of the $52,000 loss, C applies the all-other-perils deductible even though the cause was a hurricane, and D uses a 5% figure. Under s. 627.701(3)(a), F.S., an insurer must offer personal lines residential applicants hurricane deductibles of $500, 2%, 5%, and 10% of the policy dwelling limits, unless the specific percentage deductible is less than $500. Section 627.701(3)(d) then adjusts that offer set by size of risk: at dwelling limits of $250,000 or more the $500 option need not be offered; at $1 million or more but less than $3 million the insurer may offer 3% in lieu of 2%; and at $3 million or more the 2% option need not be offered.

   Reference s. 627.701(3)(a) and (3)(d), F.S.

8. An insurer is issuing a new personal lines residential property policy on a dwelling with a $400,000 dwelling limit. Under s. 627.701(3), F.S., which hurricane deductibles is the insurer required to offer the applicant?

   • A$1,000 and 1 percent, 3 percent, and 5 percent of the policy dwelling limit
   • B2 percent, 5 percent, and 10 percent of the dwelling limit, with no $500 requiredCorrect
   • C$500 and 2 percent, 5 percent, and 10 percent of the policy dwelling limit
   • DAny four deductibles the insurer selects, since the OIR sets these options by rule

   Why: Section 627.701(3)(a), F.S., sets the baseline offer for personal lines residential property insurance: hurricane deductibles of $500 and of 2 percent, 5 percent, and 10 percent of the policy dwelling limits, unless the specific percentage deductible is less than $500. That baseline is then qualified by the size of the dwelling limit. Under s. 627.701(3)(d)1., F.S., with respect to a policy covering a risk with dwelling limits of $250,000 or more, the insurer need not offer the $500 hurricane deductible but must still offer the other hurricane deductibles required by paragraph (a). At $400,000 this dwelling sits above that threshold, so only the 2, 5 and 10 percent options are mandatory. Option C is the near-miss that catches candidates who memorize paragraph (a) and never read the carve-outs in paragraph (d). Two further tiers live in the same paragraph: for dwelling limits of $1 million or more but less than $3 million the insurer may offer a 3 percent deductible in place of the 2 percent one, and at $3 million or more it need not offer the 2 percent deductible at all. Separately, s. 627.701(3)(c), F.S., lets an insurer covering a risk of $100,000 or more but less than $250,000 offer, in lieu of the $500 deductible, a guarantee that it will not nonrenew for one renewal period if the insured accepts a deductible of up to 2 percent. Whichever deductible is chosen, a policy with a separate hurricane deductible must carry the statutory warning in boldfaced type no smaller than 18 points telling the insured that the separate hurricane deductible may result in high out-of-pocket expenses.

   Reference s. 627.701(3)(a), (c) and (d), F.S.

9. 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.

10. A Florida homeowners policy has a Coverage A limit of $300,000, a 2% hurricane deductible, and a $2,500 all-other-perils deductible. In August a hurricane causes $4,000 of covered damage — less than the hurricane deductible — so the insured absorbs all of it. In October of the same calendar year a second hurricane causes $60,000 of covered damage. How much will the insurer pay on the October loss?

    • A$54,000 — each separate hurricane triggers the full $6,000 hurricane deductible again, because the deductible is applied per occurrence rather than per calendar year.
    • B$58,000 — only the $2,000 unused remainder of the hurricane deductible is applied.
    • C$57,500 — the greater of the $2,000 remainder and the $2,500 all-other-perils deductible.Correct
    • D$60,000 — no deductible applies, because the hurricane deductible was already triggered earlier in the calendar year.

    Why: Under s. 627.701(5), F.S., the hurricane deductible applies on an annual basis to all covered hurricane losses during the calendar year, not separately to each storm. The 2% deductible is $6,000; the August storm consumed $4,000 of it, leaving $2,000. Section 627.701(5)(a)3 then provides that for a subsequent hurricane the insurer may apply — the language is permissive — the greater of the remaining hurricane deductible or the deductible that applies to perils other than hurricane. Here $2,500 (all other perils) is greater than $2,000, so $2,500 is deducted: $60,000 - $2,500 = $57,500. Note that the calendar-year aggregation runs across policies issued by the same insurer or an insurer in the same group, so switching policies mid-year within one group does not reset the deductible. Section 627.701(5)(a)3 also lets insurers require policyholders to report hurricane losses that fall below the hurricane deductible, or to keep receipts or other records of them, precisely so those amounts can be credited against a later claim in the same calendar year — which is what makes the August loss count here. And under s. 627.701(5)(a)4, if there are hurricane losses in one calendar year under more than one policy from the same insurer or insurer group, the hurricane deductible is the highest amount stated in any one of those policies. Subsection (5)(a) governs personal lines residential policies issued or renewed on or after May 1, 2005.

    Reference s. 627.701(5)(a), F.S.

11. 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.

12. The National Hurricane Center issues a hurricane warning covering part of the Florida Panhandle. The system passes offshore and the last hurricane watch or warning for any part of Florida is terminated at 6:00 a.m. Tuesday. At 8:00 p.m. Wednesday, trailing winds from the same weather system tear part of the roof off an insured home in Tallahassee. Which deductible applies to that damage?

    • AThe hurricane deductible, because the hurricane's duration runs for 72 hours after the last watch or warning ends.Correct
    • BThe all-other-perils deductible, because the hurricane warning had already been terminated when the damage occurred.
    • CNo deductible at all, because wind damage occurring after a warning is canceled is excluded as a post-storm loss.
    • DThe hurricane deductible, but only if a hurricane warning had been issued specifically for the insured's own Florida county.

    Why: Section 627.4025(2), F.S. defines hurricane coverage and, importantly, defines the duration of the hurricane for deductible purposes. The period begins when a hurricane warning is issued for any part of Florida by the National Hurricane Center and ends 72 hours following the termination of the last hurricane watch or hurricane warning issued for any part of Florida by the National Hurricane Center. The damage here occurred roughly 38 hours after termination, comfortably inside the 72-hour tail, so it is a hurricane loss and the hurricane deductible applies. Option D states a common misconception: the trigger is statewide, keyed to a watch or warning for any part of Florida, not to the insured's own county. Note also that hurricane coverage under this section includes ensuing interior damage from rain, hail, sand or dust where the direct force of the windstorm first created an opening in the building.

    Reference s. 627.4025(2), F.S.

Drill the whole domain

• Florida Statutes, Rules and Regulations Pertinent to Property and Casualty (15%)
• Types of Property Policies (14%)
• Property Insurance Terms and Related Concepts (9.5%)

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• Florida's Valued Policy Law
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• Florida comparative negligence after HB 837
• Florida PIP: the 14-day rule and 80/60 split
• Citizens eligibility and the 20 percent rule
• Law and ordinance and replacement cost
• Bad faith and the civil remedy notice

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