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Last Updated: 6/2/2025

Issue: Hurricane and named storm deductibles were introduced as a risk-sharing mechanism: the policyholder bears more of the risk without raising premiums to unaffordable levels. However, insurers and consumers have issues with the use of hurricane deductibles. Insurers are concerned about clarity of state laws and actions of state officials that might limit the use of hurricane deductibles. Consumers are concerned about what to them seems an unjustified cost shifting at a time when they can least afford it. Consumers also complain about lack of meaningful disclosure about hurricane deductibles.

Hurricane deductibles were first introduced in 1992 following the significant damages caused by Hurricane Andrew in South Florida. The widespread adoption of these deductibles occurred after Hurricane Katrina in 2005, which resulted in $64 billion in insured losses. These events prompted insurers to implement hurricane and named storm deductibles as a means to mitigate potential losses in hurricane-prone areas. Over the last decade, more people and businesses have moved closer to shorelines, and property values have generally increased. As part of a broad effort to keep insurance coverage available and affordable, many insurers have recently added hurricane and named storm deductibles to limit potential losses through higher deductibles. 

As of June 2025, nineteen states and the District of Columbia have some form of in place. These states include Alabama, Connecticut, Delaware, Florida, Georgia, Hawaii, Louisiana, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, and Virginia. Other states may allow insurers to include hurricane deductibles in property insurance products.

Despite their prevalence, there are still gaps in consumer awareness regarding hurricane deductibles. A found that, out of those living in a hurricane-prone area, nearly 30% of respondents weren’t sure if their policy has a hurricane or named storm deductible. 

Overview: A deductible is the amount of loss paid by the policyholder before any loss is paid by the insurer. For most perils (such as fire damage and theft), the standard deductible could be a percentage deductible (1/2%, 1%, etc.), which is typically applied to the home’s insured value to determine the amount, or a flat dollar amount (e.g., $500 or $1,000). This means a policyholder would be responsible for paying that dollar amount out-of-pocket for a loss before their insurer would cover any losses.

In many coastal states, homeowners’ insurance policies also include deductibles that apply only to damage caused by hurricanes. A hurricane, or named storm, deductible is applied separately from standard peril deductibles and is typically a higher dollar amount, meaning a policyholder would be responsible for a larger portion of any loss. Similarly to standard peril deductibles, it can be expressed as a fixed dollar deductible or, more commonly, as a percentage of the home’s insured value, which can vary from 1% to as high as 15%.

Although definitions vary, a hurricane deductible typically applies to damage solely from a hurricane as categorized by the National Weather Service or U.S. National Hurricane Center.  A named storm deductible, in addition to applying to categorized hurricanes, also applies to a weather event declared such as a typhoon, tropical storm or a tropical cyclone by the U.S. National Weather Service or the U.S. National Hurricane Center, and where a number or “name” has been applied (e.g., Hurricane Andrew, Superstorm Sandy, etc.). Any loss must have been caused or resulted from the named storm event.

Some policies also include a windstorm or wind/hail deductible. These usually apply to any kind of damage from a wind or hail event. For example, if a tree falls on a policyholder’s roof on a windy day, the claim would be subject to the wind deductible. Wind damage from a hurricane would also potentially be subject to the windstorm or wind/hail deductible, assuming no hurricane deductible exists on the policy as well. Flood or storm surge damage, however, is covered only if a separate flood insurance policy was purchased, generally from the National Flood Insurance Program or from a private company.

Whether a hurricane, named storm, or windstorm deductible applies to a claim depends on the applicable “trigger” selected by the insurance company. These deductibles apply only if certain parameters spelled out in the insurance contract are met, which are often prescribed or limited in state law. While there are similarities among the state laws, no two laws are identical; triggers vary from state to state, as well as from insurer to insurer.

The �Ӱ���Ƶ's Property and Casualty Insurance (C) Committee is charged with monitoring and responding to issues related to P&C insurance products. The Transparency and Readability of Consumer Information (C) Working Group works to facilitate consumers' understanding of the content of insurance policies. 

In June 2024, the �Ӱ���Ƶ's Communication Division issued a Consumer Insight aimed at helping consumers understanding named storm deductibles, including hurricane deductibles.