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Watch the math on wind deductibles

Today’s class will be about wind. While your agent monitors the insurance industry in Florida, it has become painfully obvious that hurricanes and government regulation are equally dangerous.

Your first lesson is about the new “status quo” of the percentage of wind deductible and how it applies to a wind damage claim. You see this deductible on your homeowners and business policies. You know why casinos use poker chips? So you don’t think about the value of the money you’re playing with. People are not as likely to gamble their life away if they were playing with hard, cold cash. Well look at your policy closely next time and notice the wind deductible percentage. Is it 5 percent, 10 percent or even higher? Well folks, we are now playing the part of the “gambler” looking at a poker chip. Notice the insurance company doesn’t put an actual dollar figure in its place even though they could. Five percent doesn’t look like much but the value becomes very apparent at claim time.

I’ve held this class before but some need a refresher. Lately I’ve had to do the math for some surprised policy holders. Please know I’m not bothered with the policy holder’s misunderstanding. I’m angry that consumers are being misled and have one more confusing element of insurance to understand.

Class, here’s your next lesson. Charlie has a 5 percent wind deductible on his homeowners policy when the storm hits. His home is insured for $250,000. He experiences $10,000 worth of wind damage to his roof. How much will his policy pay? The answer is zero. The 5 percent deductible calculated by applying the percentage to the value of the home at time of claim, not applied to the $10,000 claim amount like many think. So 5 percent of $250,000 is $12,500. That’s big Charlie’s wind deductible. Could the carrier have said this in the first place and avoid the poker chip method? You bet. No pun intended. The insurance company says good luck Charlie, play on and we’ll help when your damage exceeds $12,500.

Gov. Christ may eventually understand he shouldn’t have run off the insurance competition in Florida. New leadership must understand their job is to attract industry to Florida, not run it off. When Tallahassee gave the political one finger salute to the insurance industry, many insurance carriers returned the favor by high-tailing their butts out of Florida. In the meantime, carriers electing to stay in Florida are playing casino and slowly raising the little percentage in wind deductible. That 5 percent doesn’t look like much but I bet your attitude changes when you’re writing that $10,000 check to the roofer.

What can Tallahassee do? Quit regulating, attract competition and influence the almighty insurance industry by stimulating competition. Someday we may see the insurance industry do an about face and compete for our business.

Andy Gregory, a co-owner and president of Des Champs & Gregory, Inc., with offices in Bradenton and Lakewood Ranch, can be reached at (941) 748-1812.

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