Do you know the differences between your deductibles?

Homeowners insurance is filled with terms and conditions that can seem confusing. A policy works in a simple fashion - it spells out the risks it will and will not cover including your deductible. If you own property in a coastal community you’ve likely heard about wind-related deductibles.

One of the more intricate areas of deductibles is storm-related wind deductibles. Every insurance company has some form of wind deductible. They are calculated as a percentage of home’s rebuild cost. There are three types of windstorm deductibles offered: 

• Wind/hail deductibles

• Hurricane deductibles

• Named storm deductibles

The percentage deductible generally ranges between 1% and 5% depending on the area’s level of storm risk and proximity to the coast. Understanding the difference in these deductibles is important: it can be the difference between paying a small amount such as $1,000 or a much greater amount at $10,000 for storm repairs.

A Wind/hail deductible is the deductible for any damage that is a result of wind/hail.

 This means that your insurer may invoke this windstorm deductible category due to damage determined to be the result of wind or hail. A 1% wind deductible on a $300,000 home would mean that you have to pay a $3,000 deductible before your insurance coverage applies for the remainder of the repair costs. This is the least restrictive, but the greatest chance of occurrence of the three wind storm deductibles, and is the most likely to be applied by your insurer. 

A Named Storm deductible applies to any damage that is a result of a storm that is named by the National Weather Bureau.

This is a very important distinction as news stations and weather channels often name storms that are not named by the National Weather Bureau.  For example, the nor’easters we had in March of 2018 were referred to by different names from various news and weather channels. However, they were not actually named by the National Weather Bureau. If your policy had a higher named storm deductible, it did not apply to any damages caused by these nor’easters. 

A Hurricane Deductible is triggered by damage that is the result of a named hurricane.

These are the most restrictive storm deductibles as they can only be applied when a storm makes landfall as a named hurricane. If it makes landfall as a tropical storm, damage may be subject to the lower ‘all other perils’ deductibles spelled out in your policy.

So, which deductible should you choose? It all depends on what is offered in your coastal area. As a consumer, you generally want to pick the more restrictive option, as it is less likely to be invoked and cost you more out-of-pocket for repairs. It is important to consult thoroughly with your insurance agent, so that you are fully aware of what is in your insurance policy before you need it!