If you live in a part of the country prone to hurricanes, brace yourself. If it hasn't happened already, your home insurance company may force you to take a policy with percentage-based deductibles for damage caused by hurricanes and windstorms.
In the past a typical home insurance policy had a standard dollar deductible (such as $1,000) for damage caused by fire, theft and other losses. Your insurer was responsible for paying the rest of the claim. (See these home insurance basics.)
But percentage-based deductibles are flooding the market. These policies use deductibles based on your home's insured value. So a homeowner with a house insured for $200,000 with a 5 percent deductible for hurricane losses would have to cough up $10,000 for repairs before his insurer would begin to pay. These deductibles generally kick in when a "named storm" hits your area. In other words, a bad thunderstorm can't trigger a hurricane deductible.
Percentage-based deductibles cost an insurer less but a homeowner more. Homeowners getting new or renewed policies with percentage-based deductibles aren't paying less in premiums.