Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)Property InsuranceMedium
A Florida resident lives in a coastal area prone to hurricanes. Their Homeowners policy (HO-3) has a $300,000 dwelling limit, a 2% hurricane deductible, and a standard 'all-other-perils' deductible of $1,000. A hurricane causes $50,000 in damage to their home and $10,000 in damage to their personal property. How much will the homeowner receive from their insurer for the dwelling damage?
- A$43,000
- B$49,000
- C$44,000
- D$50,000
Show answer & explanationAnswer & explanation
Correct answer: C. $44,000
The hurricane deductible applies to dwelling damage. The hurricane deductible is 2% of the dwelling limit: $300,000 * 0.02 = $6,000. Therefore, the homeowner will receive $50,000 (dwelling damage) - $6,000 (hurricane deductible) = $44,000. The personal property damage would be subject to the all-other-perils deductible.
Why the other options are wrong
- A. This incorrectly combines or miscalculates deductibles.
- B. This subtracts the standard deductible from the dwelling damage, not the hurricane deductible.
- D. This would be the payment if no deductible applied to the dwelling damage.
Hurricane Deductible
A separate, often percentage-based, deductible that applies to damage caused by a hurricane, typically in coastal states like Florida.
- Percentage of dwelling coverage limit
- Applies specifically to hurricane damage
- Separate from 'all-other-perils' deductible
Memory trick: Hurricane deductible is a percentage, all others are fixed.