What is it?

A wind/hail deductible refers to the amount a policyholder must pay out-of-pocket for a covered claim resulting from wind, hail, rain, or similar events, as defined by the insurer. This deductible is separate from any other applicable deductibles.

Why do Wind/Hail Deductibles Exist?

Due to the increasing frequency and severity of weather-related damage claims, insurance providers are introducing specific wind/hail deductibles on property to help manage costs and maintain financial stability. A higher deductible can also help in lowering premiums, as the business is taking on more risk.

Types of Deductibles

Understanding the types of deductibles applicable to wind and hail damage is important for commercial property owners.

• Dollar-based Deductibles: A fixed dollar amount that you pay out-of-pocket for a covered insurance claim before your insurance company pays the rest. For example, a $5,000 deductible means $5,000 is the insured's responsibility of a covered claim.
• Percentage-based Deductibles: Wind/Hail deductibles are often a percentage of your property's insured value. For example, a 3% deductible on a $250,000 policy would require you to pay $7,500 before insurance covers the remaining repair costs. The percentage typically ranges from %1 to %5, but can be higher in high-risk areas. A minimum deductible may also apply.

Many policyholders mistakenly believe that percentage-based wind/hail deductibles are calculated from the total loss amount. In reality, they are typically based on the insured value of the property. The method used to determine this value can vary depending on the specific insurance policy.

These deductibles may be applied in different ways, including:

• Per-building: A separate percentage is applies to each building.
• Per-location: A single percentage is applied to the total value of all buildings at a specific address.
• Per-occurrence: The percentage applies to each qualifying weather event.

Managing Large Wind/Hail Deductibles

If a high wind/hail deductible is a significant financial risk for your business, you can inquire about the following option:

• Deductible buyback policy: A separate insurance policy that allows you to reduce your high percentage deductible to a more manageable amount for an additional premium.

As a business owner, it's essential to safeguard your physical assets and ensure operational continuity during a loss. Gaining understanding of wind/hail deductibles can help you plan ahead, minimize disruptions, and be financially prepared to meet deductible obligations.