Wind Deductible
WIND DEDUCTIBLES
Almost all homeowner and commercial property policies in coastal areas contain a separate Wind Deductible ranging from 1% to 5% of the structure’s value. These higher deductibles can apply to any/all Wind related events, or may only apply to Named Storms or Hurricanes, depending on the company involved.
The structure’s value is not the same as an assessed value by a local Town or the market value by a realtor. Rather, it is the replacement cost value of the home/building; i.e. what it would cost to rebuild using todays’ labor and materials. This value is indicated on your policy declaration page. Most policies also include an Inflation Guard endorsement which will automatically increase this value each year, so a periodic review of the Replacement Cost value on your home/building is recommended. The Wind Deductible is normally a percentage of this value.
The separate Wind Deductible should be listed on the Coverage page of your policy declaration in addition to the deductible that would apply to other covered losses. Each individual company’s version of Wind Deductibles may read a little differently, so how your neighbor’s policy responds to a wind-related claim may not be how your policy will respond. If you do not understand the policy language, always ask your agent to clarify.
The different types of Wind Deductibles are:
-An All Wind Deductible will apply when there is any covered damage caused by any wind event. So even if a 20 mile per hour wind blows the tree onto your home, your All Wind Deductible will apply. An All Wind deductible will also apply to claims arising from named storms and Hurricanes.
-A Named Storm Deductible will apply when there is any covered damage resulting from a storm named by the National Oceanic and Atmospheric Administration (NOAA). They will only name storms that are considered to be Tropical Storms or Hurricanes.
Tropical Storms are winds of 39-73 mph
Hurricane Category 1 are winds of 74-95 mph
Hurricane Category 2 are winds of 96-110 mph
Hurricane Category 3 are winds of 111-129 mph
Hurricane Category 4 are winds of 130-156 mph
Hurricane Category 5 are winds over 157 mph
-A Hurricane Deductible will apply when there is any covered damage resulting from a Hurricane named by NOAA using the above guidelines. Each company will deal with Hurricane Warnings differently, so contact your agent if there are questions.
So if your home structure value is $500,000 and a tree falls on your home, here are examples of how the various wind deductibles would apply:
– If a 20 mph Wind blows the tree onto your house
-An All Wind Deductible would apply. So if we used a 2% deductible for the example, at $500,000 x 2% = $10,000. You would be responsible for the first $10,000 of the claim.
-A Named Storm Deductible of 2% would not apply because NOAA would not have named the storm as it is below 39 mph. Your normal All Peril Deductible would apply.
-A Hurricane Deductible of 2% would not apply because again NOAA would not name this event as a hurricane. Your normal All Peril Deductible would apply.
– If a 50 mph Wind causes the damage
-An All Wind Deductible of 2% would apply. So $500,000 x 2% = $10,000. You would be responsible for the first $10,000 of the claim.
-A Named Storm Deductible of 2% would apply because NOAA would have named the storm as it is over 39 mph. You would be responsible for the first $10,000 of the claim.
-A Hurricane Deductible of 2% would not apply because again NOAA did not name this wind a hurricane. Your normal All Peril Deductible would apply.
– If a 100 mph Wind causes the damage
-An All Wind Deductible of 2% would apply. So $500,000 x 2% = $10,000. You would be responsible for the first $10,000 of the claim.
-A Named Storm Deductible of 2% would apply because NOAA would have named the storm as it is over 39 mph. You would be responsible for the first $10,000 of the claim.
-A Hurricane Deductible of 2% would apply because NOAA would have named the storm as it is over 74 mph. You would be responsible for the first $10,000 of the claim. Every company has their own version of this Deductible – so again it may not be the same as your neighbor’s Hurricane Deductible.
As evidenced by these examples, having NO Wind Deductible is best, Hurricane Deductibles are second best, Named Storm Deductibles next followed by an All Wind Deductible which is the least favorable option. Obviously the lower the percentage of the deductible the better.
As a general rule, the better the deductible option, the more premium it will cost. So you will need to determine your comfort level as to coverage and cost.