A relatively inexperienced attorney from another law firm asked in an open forum whether a Category 5 hurricane mandates that no hurricane deductible can be applied and if Hurricane Michael policyholders can get a return of their hurricane deductible. Corey Harris has been involved in hurricane work with our firm since 2005. He quickly replied that the deductible is going to be returned only if the Easter Bunny is bringing a present.

I then learned that a public adjuster on a multi-million dollar case called our office asking about the same thing. He claimed that a client stated that some attorney opined that the authorities did not want to classify Hurricane Michael as a Category 5 because it meant that hurricane deductibles could not be applied. We told him this is not true and to have the client’s alleged attorney call us to learn hurricane insurance law.

It is a rumor that policyholders have no hurricane deductible if the hurricane is classified as Category 5.

I wish it were otherwise. I will be back up in Panama City on Tuesday following the Easter holiday. From what I have seen, restoration is going slowly for numerous reasons. Not enough money from insurance companies is certainly one of the culprits. Building permits and construction demand is another—our local office has been slowed on its build-out. It has nothing to do with insurance, but the other problems.

Category 5 hurricanes are freaks of nature. The wind speed certainly destroys structures and causes many subtle fastening damages, even if not totally destroyed, that often go unnoticed and unclaimed.

This rumor possibly started with discussion of how deductibles get absorbed in case of a total loss or a loss where the damage exceeds the policy limits. These are very common situations in Category 5 hurricanes. Accordingly, Hurricane Michael Policyholders should read two blogs I wrote nine and ten years ago on this topic:

Subtract Deductibles From Repair or Replacement Values—Not From Policy Limits

When Calculating Insurance Payments, Take the Deductible From the Repair Value and Not the Policy Limits

Rumors and misinformation are rampant following hurricanes. If anybody would like some experienced answers, you can use the search function located at the top of our blog. Otherwise, please do not hesitate to call my cell phone at (813) 695-8733.

Happy Easter! Let’s always remember to count our blessings.

Song For The Day

  • InsuranceClaimsSpecialist, LLC

    Great article Chip… One should also be mindful that a deductible may only be partially “absorbed”. For instance, a Dwelling Policy limit of 200K with an all perils deductible of 5k. The insured suffers a covered loss totaling 203K, The policy would require a total payment of 198K. Hence, 3K of the deductible would have been “absorbed”. One must also pay particular attention as to whether the deductible APPLIES across ALL coverages. The reason being, you could have the same scenario in which personal property was also damaged with a coverage limit of 20K and total to the contents being 30K. In this case the entire deductible would be “absorbed” under the contents portion of the claim and the insured would be entitled to receive the entirety of the policy limits for BOTH the Dwelling and Contents. Often times in initial assessments deductibles may be applied properly based on those assessments only to have a final determination of the amount(s) of the loss exceeding the policy limits by an amount greater than the applicable deductible. In such cases, one must be certain to verify the proper application of the deductible as the numbers have changed. I would also like to point out that I have seen policies that explicitly state that if the loss amount exceeds a certain number, not necessarily the policy limit, that no deductible will be applied. This is why one must ALWAYS read the policy.

    • wmerlin

      Thanks for the great comment!

      The topic of deductibles can be very complex when one gets into commercial policies. We have litigated over language of sublimit damages, separate deductibles and how they are to be applied. It is not so easy on many commercial policies with sublimits of loss and dedcutible language that is not consistent.

      Reading the policy and then the information provided at the point of sale to the policyholder is important in those cases.

  • David Thompson

    This rumor has been around since shortly after the winds of Michael stopped blowing. It reminds me of an insurance class I gave, “A Guy in The Bar Told Me.” It’s simple, whether a deductible is waived or not can be found in the policy…not in a bar!

    I consistently tell insurance agents, “Read the policies you sell.” The same message goes for consumers, read what you are buying.

    It seems, too, that some attorneys need to read the policy!

    • wmerlin


      You are right! Thanks for the comment and great advice.

      I am not certain where the rumor started, but it was repeated enough through social media that when Hurricane Michael was categorized as a 5, hundreds of policyholders started asking and demanding that thier deductibles be returned.

  • David Thompson

    Quite timely with your blog; NOAA upgraded Michael to a Category 5 storm.


    We need to find “The Guy In The Bar” and educate him here!