A wind and hail deductible is the amount of money you’d have to pay out of pocket before your insurance will pay out the rest of your claim for wind and hail damage. This is different from a standard what is a deductible which is a flat dollar amount.
Although wind and hail damage is a standard part of commercial property insurance coverage for much of the country, it’s often excluded in coastal areas that are prone to hurricanes. In these areas, insurers may add a separate, higher deductible for wind and hail damage to compensate for the increased risk.
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How does a wind and hail deductible work?
Most insurance deductibles are set at a flat dollar amount. If you have a $1,000 deductible on a particular line of insurance, then you would pay the deductible amount of $1,000 on a claim before your insurance covers the cost of the rest of your claim. Wind and hail coverage uses a percentage deductible, usually between 1% and 5% of the damage costs. That means your out-of-pocket cost after a storm can be much higher than you expect. For instance, if your commercial property is insured for $400,000 and you have a 3% wind and hail deductible, you’d be responsible for the first $12,000 of covered damage before your insurance pays anything. This is very different from a typical $500 or $1,000 deductible on other types of claims, so it’s important to factor this into your emergency budget. Because of this, you might find that why your deductible might be higher than you think.
What insurance policies would include a wind/hail deductible?
Coverage for wind and hail damage is often included as part of your commercial property insurance or can be added as an endorsement to your policy. Many small business owners combine general liability insurance and commercial property insurance in a business owner’s policy (BOP) because it’s usually less expensive than buying these two policies separately. As with commercial property insurance, wind and hail coverage can often be added to your business owner’s policy, though it may have a separate deductible for wind and hail damage.
Watch for common wind and hail coverage limitations
Not all wind and hail claims are treated the same. Some policies include endorsements that limit coverage in certain situations, such as:
- Cosmetic damage exclusions may deny claims for dents or surface damage that don’t affect structural integrity.
- Roof age limitations may reduce payouts for older roofs or apply depreciation instead of full replacement value.
Always review these details before purchasing a policy so you’re not surprised at claim time. You can review your declarations page to understand your coverage.