Many years ago homeowners and business owners in coastal areas could buy the same policies as everyone else. Property coverage was included and the deductible was the same amount no matter what happened to the building, and life was good.
Several years of active hurricane seasons have changed everything. Property insurance in coastal areas is harder to come by, and often includes a higher deductible for wind and hail, named storm, and/or hurricane damage.
What Is Your Deductible?
If you live in a coastal area, you may have noticed that your policy includes a strong warning that there is a separate deductible for wind-related events. For example, your regular deductible for all other perils might be $1,000, but your deductible for wind/hail, named storm or hurricane might be $5,000. Some areas have even instituted a percentage deductible of 2%, 3%, 5%, or even 10%.
The percentage deductible is typically applied to the amount of your insurance, NOT the amount of your damage. For instance, if you have a 5% deductible and you have a building insured for $1,000,000 that sustained $100,000 in damage, your deductible amount would be $50,000, meaning the insurance company would only reimburse you for $50,000 in damage.
When Does Your Deductible Apply?
Your wind event deductible will apply as it is described in the policy:
Wind or Hail: If the damage is incurred due to any event involving wind or hail, such as a tornado or even extremely strong winds, the higher deductible will apply.
Named Storm: This is a better option, as the higher deductible will only apply if damage is incurred due to a storm that has been named by the National Weather Service. This applies to any storm given a name, including the subtropical storms (such as the recently weathered Alberto), tropical storms and hurricanes.
Hurricane: The best option by far, this means the higher deductible applies only to damage incurred from events that are classified as hurricanes.
Deductibles may also be classified as per occurrence (meaning if you’re hit by more than one wind event you owe more than one deductible) or calendar year (meaning no matter the number of wind events, you only owe one deductible during the policy period).
What Can You Do About It?
Many Florida home and business owners found themselves with sticker shock after Hurricane Irma. The percentage deductibles on the policies left them holding the bag for large percentages of damage incurred due to the storm.
There is an insurance solution to this problem: wind deductible buyback insurance. This allows policyholders, for an additional premium, to reduce or even eliminate the wind deductible on their homeowners or business property insurance policy.
Wind deductible buyback insurance may be purchased as an endorsement to the existing property insurance policy or as a separate standalone coverage. Deductibles may be reduced to a few hundred or thousand dollars, or the coverage may buy back the entire deductible so that the homeowner or business owner owes nothing in the event of a claim.
Hayes Brokers offers deductible buyback coverage for a variety of high deductible policies, including wind and earthquake. Contact us today to find out more.