The board of a 120-unit condominium association in Altamonte Springs approves its renewal with a 3 percent named storm deductible because it lowers the premium more than any other option. The building is insured for $28 million, so the deductible is $840,000, though nobody on the board does that math at the meeting. When Hurricane Milton crosses Central Florida and causes about $500,000 in roof and exterior damage, the claim is entirely below the deductible. The insurer pays nothing, the reserves cover part of it and the owners receive a special assessment for the rest. The policy worked exactly as written. The board had simply chosen a deductible it could not pay.
For Florida homeowners and condominium associations, the deductible is not a footnote on the renewal. It is the association’s own share of every loss, and on a percentage hurricane deductible, it can be the largest single number the board will ever have to fund. Central Florida boards sometimes assume hurricane deductibles are a coastal concern, but the deductible applies to every hurricane claim, and recent storms have shown that wind damage reaches communities well inland.
What a Deductible Does for an Association
A deductible is the amount the association pays on a covered loss before the policy starts paying. It is the association’s retained share of the risk, usually chosen in exchange for a lower premium. A higher deductible lowers the premium, but it does not lower the association’s total risk. It moves more of that risk from the insurer to the community, which means to the reserves, to a line of credit or to the owners through an assessment. Any loss that falls under the deductible is paid entirely by the association.
Hurricane Deductibles Are Usually a Percentage
Most Florida association property policies use a percentage hurricane or named storm deductible, commonly between 2 and 5 percent and sometimes higher, applied to the insured value of the property rather than to the size of the loss. A percentage that looks small on a proposal becomes a large number once it is calculated. On a building or group of buildings insured for $20 million, a 3 percent deductible is $600,000, and on $40 million it is $1.2 million. The most useful thing a board can do with any renewal is ask what each deductible means in dollars, using current insured values rather than numbers from a few years ago. Some policies apply the percentage per building or per location, so ask how it is calculated, too.
What Florida Law Expects of Condominium Boards
For condominium associations, section 718.111 of the Florida Statutes speaks directly to how the property deductible is set. The board may consider the association’s available funds, including reserves, or its predetermined special assessment authority when choosing the deductible. The deductible must be consistent with industry standards and prevailing practice for similar communities in the area, and it must be adopted by the board at a meeting noticed in advance under the statute’s procedure, with the notice stating the proposed deductible and the funds or assessment authority the board is relying on to pay it.
In other words, Florida law treats the deductible as a financial planning decision, not just a way to lower the premium. A board that picks the cheapest option without asking where the money would come from is not following the spirit of the statute. Homeowners associations under Chapter 720 often insure only common areas, such as the clubhouse, pool, gatehouse and perimeter walls, so their deductibles tend to be smaller, but the same discipline applies, especially for HOAs that insure townhome buildings. Our articles on HOA insurance requirements in Florida and HOA versus condo association insurance explain the differences.
More Than One Deductible Can Apply to One Storm
A single hurricane can trigger several deductibles at once. Wind damage falls under the property policy’s hurricane or named storm deductible. Flood damage falls under the association’s flood policy, with its own deductible, if the association carries one. Equipment breakdown, such as an elevator, pump or electrical system damaged by the storm, may have a deductible of its own. A storm that damages the roofs, floods the ground-floor units or parking area and knocks out an elevator can leave the association paying three deductibles before any coverage responds, so boards should add up the combined exposure from one severe storm rather than looking at each policy alone. Our articles on whether HOA insurance covers hurricane damage and whether HOAs need flood insurance cover both sides of that storm.
A Lower Premium Is Not Always the Better Deal
It is tempting to compare renewal proposals by premium, since that is the number the board has to defend to owners at the budget meeting. But a cheaper proposal built on a much larger deductible has not reduced the association’s exposure. It has shifted more of it to the community. That can be a reasonable choice for an association with strong reserves that can truly absorb the risk. It is a much bigger problem for an association whose reserves are thin, because the savings on the premium can come back many times over as an assessment after the first storm. The right question is not which proposal costs less but which one leaves the association with a risk it can actually carry.
Deductibles Belong in the Same Conversation as Reserves
This is where deductible planning connects to the rest of the association’s finances. If the hurricane deductible is $400,000 and the association could realistically produce only $150,000 on short notice, that gap has to be closed somehow: by building reserves, by choosing a lower deductible even at a higher premium, by arranging a line of credit or by accepting that an assessment would follow any major storm and telling owners so. None of those is wrong on its own. What causes trouble is not asking the question until after the storm. Florida’s newer condominium reserve requirements add to the pressure on budgets, which makes this conversation more important, not less, as our articles on Florida HOA reserve requirements and why Florida HOA fees are increasing explain.
What It Means for Owners
When an association passes a deductible on to owners through an assessment, each owner’s share can be substantial, especially in a smaller community. Condo unit owners can protect themselves with loss assessment coverage on their own policies. Florida requires at least $2,000 on unit owner policies, but that is a minimum, and owners should confirm how their coverage treats assessments that come from the association’s deductible. Our articles on loss assessment coverage for Florida condo owners and how loss assessment coverage affects your HOA community explain how it works, and our article on whether a condo or HOA assessment can cost you your Florida home covers what happens when owners cannot pay.
What Boards Should Confirm Before Renewal
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What is each deductible in dollars, based on current insured values?
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Is the hurricane deductible applied per building, per location or to the total?
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Which coverages carry separate deductibles, such as flood and equipment breakdown, and what is the combined exposure from one storm?
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Where would the money come from: reserves, a line of credit or an assessment?
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For condominiums, was the deductible adopted at a properly noticed board meeting under section 718.111?
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Have owners been told what the deductible could mean for them?
HOA and Condominium Association Insurance With Prestige Insurance Group
Prestige Insurance Group works with homeowners and condominium associations across Orlando, Altamonte Springs, Winter Park, Kissimmee, Miami and the rest of Florida, and HOA and condominium coverage is one of the agency’s core specialties. We compare deductible options across several markets, translate each one into dollars and help boards choose a structure the community can actually fund. Learn more on our HOA insurance page, or see HOA insurance in Orlando, how much HOA insurance costs in Florida and what HOA insurance does not cover. Call the office nearest you. Se habla español.
Orlando: 407-993-2331 Miami: 305-969-8776
Frequently Asked Questions
How does a percentage hurricane deductible work for an association?
It is a percentage of the insured property value, not of the loss. On property insured for $20 million, a 3 percent deductible is $600,000, and the association pays that amount before the policy responds.
Who pays the association’s deductible?
The association, from reserves, available funds or a special assessment on the owners. Any loss smaller than the deductible is paid entirely by the association.
What does Florida law require when a condo board sets its deductible?
Section 718.111 lets the board consider reserves or assessment authority, requires the deductible to be consistent with industry standards for similar local communities and requires it to be adopted at a properly noticed board meeting.
Can one hurricane trigger more than one deductible?
Yes. Wind, flood and equipment breakdown damage can each carry a separate deductible, so the association’s combined exposure from one storm can be much larger than any single deductible.
General information only, not legal advice. Deductible structures, policy terms and carrier practices vary, and Florida statutes governing condominium and homeowners associations are amended regularly. Boards should confirm current requirements with the association’s counsel and refer to their actual policies and governing documents for the terms that apply.
