Unfortunately, these deductibles aren’t set dollar amounts, and they aren’t determined by homeowners. They’re set by large companies like Farmers, Allstate and State Farm and they deduct a percentage of your home’s value. These deductibles may be as low as 5% even in hurricane prone areas, but that can add up depending on the total value of your house.
The recent severe hurricanes have had a significant impact on this policy. Hurricane Ike blasted through nine states in 2008, inflicting the fourth-highest property damage cost in US history, even before calculating losses for flood damage.
Hurricane Katrina cost insurers even more, racking in a total of $41 billion in damages in 2005. After so many major storms, many insurers saw the need to adjust in order to avoid such extraordinary losses during severe weather.
Several companies still offer flat deductibles, like Safeco’s single $1,000 deductible that covers roof damage. The Hartford seems to offer an identical program, but it includes an unusual depreciation program that starts as soon as you claim roof damage. The value of your roof will depreciate by 3% every year after you make a claim, so if after only 5 years, the value would have been depreciated by 15%, and that amount would be added added onto the $1,000 deductible.