Our client suffered damage from Hurricane Ian. The damages have exceeded the dwelling policy limits and therefore the hurricane deductible is being absorbed on the dwelling. The insured also suffered damage to contents, that do not exceed the limits. The insurer is applying the hurricane deductible to the contents. Is this correct? It is my opinion that the insured has to incur the deductible when repairing the dwelling because the limits were not sufficient that is why it was absorbed. Wouldn't the insured essentially be incurring the deductible twice if it is applied to the contents as well?
Florida Subscriber
You are correct in that the insurer is applying the deductibles twice, which is not allowed. In the standard ISO HO 00 03, the deductible clause is as follows:
"Unless otherwise noted in this policy, the following deductible provision applies: With respect to any one loss: 1. Subject to the applicable limit of liability, we will pay only that part of the total of all loss payable that exceeds the deductible amount shown in the Declarations. 2. If two or more deductibles under this policy apply to the loss, only the highest deductible amount will apply. "
There is nothing that indicates the hurricane deductible should be applied multiple times per loss, and the hurricane endorsements do not have such language either.
Theoretically, a property could be damaged by both a hurricane and a fire; in this situation, two deductibles could be applied. However, the policy clearly states that in that situation, only the larger deductible would apply. So if the hurricane deductible was $5000 and the all peril deductible was $500, only $5000 would be applied to the loss as the deductible, not $5,500.
An insurer cannot charge the insured the same deductible twice within the same loss. Your insured suffered hurricane damage throughout the property from the hurricane. The hurricane deductible has been absorbed by the dwelling coverage limits and the fact that the limits aren't sufficient for the entirety of the insured's loss to the dwelling. So the deductible has already been applied to the loss as a whole. Therefore, as further coverages are applied, the deductible has already been handled. The deductible isn't applied to every section of the policy individually, it is applied per loss.