From the Florida Insurance Council; updated on August 20, 2008

Originally, Florida's percentage deductibles applied to any windstorm loss - tornado, thunderstorm, tropical storm, hurricane. The 1997 Legislature, with the industry's support, agreed in the mid-1990's to limit percentage deductibles to hurricane losses. Current Florida law on percentage deductibles (Section 627.701, F.S., 1997) was patterned after Hawaii's  percentage hurricane deductible, the only law in effect at the time. The Florida Insurance Council believes the statute is clear as currently worded. However, FIC has supported efforts over the past several years to make it even clearer. 

There was some confusion over application of the hurricane deductible following Hurricane Irene, which came ashore October 15-16, 1999,  in Dade, Broward and Palm Beach counties. Irene caused $100 million in wind damage and $100 million in flooding losses. Some south Florida homeowners complained because the hurricane deductible was applied even though it was never clear Irene produced hurricane-force winds over the Florida mainland.

Common misconceptions include:

• The hurricane deductible is triggered by a hurricane watch or warning from the National Hurricane Center, allowing insurers to impose it regardless of whether hurricane-force winds ever hit the state.
• Once the hurricane deductible is triggered, it can be applied anywhere in Florida, even for an unrelated weather event hundreds of miles away. Section 627.4025, Florida Statutes, provides that application of percentage hurricane deductibles  is triggered not by a watch or warning, but by windstorm losses resulting from  "a storm system that has been declared to be a hurricane by the National Hurricane Center of the National Weather Service." The deductible was appropriate for Irene claims because the Irene system had been declared a hurricane, regardless of whether hurricane-force winds occurred over mainland Florida.

As the Senate Banking and Insurance Committee noted in its September 1999 study, "on a case by case basis, it may be difficult to determine whether a windstorm loss in a particular county or area was caused by or resulting from a hurricane particularly if the wind speed is below hurricane force winds (which is very difficult to determine) and is geographically distant from the center of the storm system." The key is that the system had been declared a hurricane at some point and that the losses resulted from that system, the standards established by Hawaii. 

Section 627.4025 restricts the duration of the insurance industry's application of the percentage deductible. The hurricane deductible can be imposed beginning "at the time a hurricane watch or warning is issued for any part of Florida," continuing "for the time period during which the hurricane conditions exist anywhere in Florida" and ending 72 hours following the termination of the last hurricane watch or warning."

A hurricane watch or warning does not authorize use of the percentage deductible, but defines when use of the percentage deductible can begin and when it must end - to the benefit of consumers. An insurer could not impose the deductible on damage to a home from a sudden severe thunderstorm when a hurricane system is still hundreds of miles and several days from Florida because a watch or warning would not have been issued. Carriers must stop imposing the percentage deductible 72 hours after termination of the last watch or warning, so damages from severe thunderstorms which often occur a week or more after a hurricane would be subject to the general deductible.