Deep Dive on Insurance Deductibles – by Cohen Law Group

In almost every homeowner’s insurance contract, there is a deductible that the homeowner is
required to pay before insurance proceeds become due and owing. Many times, the amount of the
deductible is dependent on whether the claim is a hurricane loss or a non-hurricane loss. Although
homeowners can obtain lower deductible amounts, usually by paying higher premiums, a vast
number of policies in Florida contain higher deductibles for hurricane losses than non-hurricane losses.
A very basic way of looking at the deductible, if the homeowner has a deductible of $5,000 on a
hurricane claim, the loss must have a value of more than that $5,000 before the insurance company is
required to pay any funds for the loss. If the value of the claim is below $5,000 that is typically referred
to as being below deductible. If the claim is valued at $6,000 then the insurance company will reduce
the payment by the $5,000 deductible, as the homeowner is responsible for paying this for the repairs,
and will make a payment to the homeowner for $1,000.

I often speak with homeowners who will receive a small payment for their damages that was
reduced by the deductible. Many homeowners are under the impression that because the amount paid
was reduced by the amount of the deductible, that the deductible has been paid. This is not the case. In
its simplest form, if the homeowner needs $20,000 for the damages and there is a $5,000 deductible,
then the homeowner will receive $15,000 and will be required to pay out of pocket the $5,000
deductible.

Florida statute 489.147 (2023) addresses prohibited property insurance practices. The statute
states that the “consumer is responsible for payment of any insurance deductible.” Subsection (3) states
that it is a felony of the third degree to pay, waive, or rebate any part of the insurance deductible with
the intent to injure, defraud, or deceive.

It is important for homeowners to understand how their policy works and specifically, what type
of costs the homeowner could be liable for when shopping for insurance. Many times, I believe, it is
better to pay a little extra in premium for a lower deductible than to be subject to much larger hurricane
deductibles.

Brandon Pharis, Esq.

Cohen Law Group