The premium is not what breaks a FL rental deal. The hurricane deductible is.

Miami, Florida
Insurance
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The premium is not what breaks a FL rental deal. The hurricane deductible is.

Hikaru Yamagishi
Technology · Singapore · Member since 2026 · 24 posts · 1 vote

I am not in real estate or insurance. I just got obsessed with Florida's public insurance data and built a little tool to read it.

Here is the thing that keeps surprising out-of-state investors I talk to. When you run a pro forma on a FL rental, you budget the annual premium. Say $6,000 to $11,000 a year depending on the carrier. That is the number everyone plugs in.

But the premium is an operating expense. The hurricane deductible is a capital event. On the coast it is a percentage of your Coverage A (your dwelling limit), not a flat $1,000 or $2,500.

Example I pulled for a Cape Coral house with about a $390,000 Coverage A:

- 2% hurricane deductible is about $7,800

- 5% hurricane deductible is about $19,500

In Florida that is a once-a-year number, not per storm. By law the hurricane deductible applies once per calendar year, so if a second hurricane hits the same year you are only out your regular deductible after that, not another full one. But it is still money you pay before the policy pays a dollar, and one bad season it can eat a full year of cash flow or more.

Most out-of-state buyers I have talked to did not know their deductible was a percentage until after they closed. And the flood zone and the rebuild math behind these numbers are public. You can see them before you make an offer. They are just buried where nobody shows the buyer.

If you are eyeing a FL rental, drop the county and a rough rebuild value and I will pull the 2% vs 5% deductible exposure for it. Anyone here actually run the deductible into their numbers, or just the premium?

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  • Michael Koeplin
    Saint Paul, MN · Member since 2015 · 51 posts · 33 votes
    3d

    I think this is a really important distinction. Investors tend to model insurance as an annual expense, but the deductible is really retained risk that needs to be modeled separately.

    And it isn’t just hurricanes. Wind/hail deductibles, flood deductibles, exclusions and even the amount of business income coverage can change the economics of a property pretty quickly.

    I’ve been thinking more and more that insurance needs to be part of the due diligence before the offer, not something you shop for once the deal is already together.

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  • Hikaru Yamagishi
    OP
    Technology · Singapore · Member since 2026 · 24 posts · 1 vote
    2d

    Exactly, retained risk is the right way to put it. The premium is the number everyone models, the deductible is the one that actually hits you, so modeling them separately makes sense.

    And you are right it is more than hurricanes. Wind and hail, flood, exclusions, the business income piece, those all move the real economics, and most of them are knowable before you are under contract.

    The flood zone, the filed rate direction, the carrier spread, it is all public before the offer. It is just scattered and nobody lines it up for the buyer. If it is useful I can pull that pre-offer picture for a county you work in and you can see what I mean.

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  • Divin KanyamaBusiness Member
    Accountant · Seattle, WA · Member since 2025 · 319 posts · 107 votes
    2d

    This is an important distinction for Florida investors, @Hikaru Yamagishi . The annual premium belongs in operating expenses, but the hurricane deductible should be treated as a potential liquidity event and reflected in reserves and downside planning.

    A deal can appear to cash flow until one storm requires a five-figure outlay before coverage responds. Investors should review the deductible percentage, Coverage A amount, flood exposure, exclusions, and available reserves before making an offer—not after closing.

    Strong underwriting confirms that the property can support the recurring premium and that the owner can absorb the deductible without disrupting debt service or the rest of the portfolio.

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  • Hikaru Yamagishi
    OP
    Technology · Singapore · Member since 2026 · 24 posts · 1 vote
    2d

    Yeah, I think so. A deal can look like it cash flows and still leave the owner short when one storm means five figures out of pocket before the policy kicks in. That's why I treat the deductible as a liquidity thing. Worth looking at before the offer, not after you close.

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    2d

    Hikaru, this is a really good point, especially for investors underwriting Florida rentals from out of state. Insurance shouldn’t just be modeled as the annual premium. The deductible and the amount of cash you’d need to bring to a claim should be part of the risk analysis too. A property can look like it has healthy monthly cash flow until one major event requires a large out-of-pocket payment.

    I’m from Florida as well, and I’d also look at the insurance quote alongside the property’s reserves, flood exposure, roof age, replacement cost, and overall condition before deciding what the property is actually worth to you. For me, the question isn’t just “can this property cash flow?” It’s “can I comfortably own this property when something goes wrong?”

    Feel free to DM me, I’d be happy to send over our Turn Key Rental Analyzer so you can build insurance, reserves, and other property-level costs into the numbers.

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  • Hikaru Yamagishi
    OP
    Technology · Singapore · Member since 2026 · 24 posts · 1 vote
    2d

    Appreciate it, Ashish. I went and looked at EvaluateDeals, it's clean. You drop in the numbers and it runs the returns, cash flow, and the tax side, which most analyzers skip.

    Mine sits one step before that. It figures out the number that goes in the insurance cell, from live Florida data, the flood zone, what carriers are actually charging in that county, and which way rates are filing. So it feeds right into a model like yours instead of competing with it.

    You invest in Florida too, so you know how much that one line can swing a deal. If it's ever useful for you or your clients, hit me up anytime, happy to help.

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