The Importance of Understanding Your Wind-Hail Deductible
Geographic locations and other risk factors are driving the addition of Wind-Hail deductibles being expressed as a percentage more often in today’s property insurance market. A common misunderstanding about percentage wind and hail deductibles is that they apply to the total loss amount. In reality, they’re derived from the value of a property rather than a flat dollar amount.
But what factors are included in that property value? It’s important to understand where the percentage is derived from, as business owners often believe the deductible is much lower than it is.
Wind-Hail deductibles can vary quite a bit across insurance polices. Here’s how they can be calculated:
- A percentage of the building’s insurance limit
- A combination of the building’s insurance limit and the business personal property limit
- The building’s insurance limit, plus business personal property and business income limits
- Applied to these limits either at a blanket valuation or per location
Understanding how your policy calculates this deductible is key to avoiding surprises.
Here are some examples of stated limits on a policy and how they translate to a wind-hail claims scenario given how a carrier derives the deductible:
| Location 1 – Building | $5,000,000 |
| Location 1 – Business Personal Property | $500,000 |
| Location 2 – Building | $2,000,000 |
| Location 2 – Business Personal Property | $10,000 |
| Blanketed Business Income | $1,000,000 |
| Wind-Hail Deductible | 1% |
Example 1:
Wind-hail deductible applies to building and business personal property per location.
Loss is at location 1 in the amount of $100,000 to the roof cause of loss wind-hail.
$55,000 would be the deductible and then $45,000 would be the responsibility of the insurance carrier.
Example 2:
Wind-hail deductible applies to building, business personal property, and business income per location.
Loss is at location 1 in the amount of $100,000 to the roof cause of loss wind-hail.
$65,000 would be the deductible and then $35,000 would be the responsibility of the insurance carrier.
Example 3:
Wind-hail deductible applies to building, business personal property, and business income blanketed.
Loss is at location 1 in the amount of $100,000 to the roof cause of loss wind-hail.
$85,100 would be the deductible and then $14,900 would be the responsibility of the insurance carrier.
Key Takeaways
As a business owner, protecting both your physical assets and your ability to continue operations during a loss is crucial. Understanding how wind-hail deductibles work can help you and your insurance partners prepare for a loss, ensuring smoother business continuity and the ability to cover deductibles when needed. Contact your M3 Client Executive to learn more about your protections.
