Deductibles represent money an insured must pay before insurance coverage kicks in. Most property insurance policies cover property damage claims arising from a variety of causes – fire, lightning, theft, sinkhole, Wind/Hail and more. Choosing a property policy that includes a high deductible usually translates into lower premium. It also means when a loss occurs such as a fire, lightning etc, the property owner will pay more out of pocket costs to rebuild or repair the damage. Major weather events like Tropical Storms or Hurricanes can have a devastating effect on a property owner as the Wind/Hail deductible is normally a percentage of the total insured value (TIV) of the property.
Hurricane season can be harsh on Florida property owners. Because torrential wind and rain can damage even the sturdiest structures, it is imperative that these policyholders have the insurance they need in advance of a storm. Securing a deductible that helps to reduce the property owner’s out-of-pocket expenses if disaster strikes is very important, whether it is a home or a business.
Strong winds from thunderstorms, tornados, tropical storms and hurricanes in addition to hail can rip shingles and damages roofs, blow out windows and doors, and much more. Wind and Hail coverage is required to protect against these types of physical losses to property and related contents. Without Wind/Hail coverage, there is no insurance to provide for the repairs.
Depending on the property location, the percentage deductible can range from 1-5 percent. The greater the risk of wind damage, the higher the percentage. For a $500,000 property whether residential or commercial with a 5 percent deductible, the property owner is responsible for the first $25,000 toward a claim.
These deductibles are applied to each weather event. The frequency and intensity of recent storms has not helped matters. With insurance carriers forced to increase rates and windstorm deductibles to account for their bottom line, policyholders are hard-pressed to reach deeper into their pockets to begin the recovery process following a loss.
One way to get around the higher windstorm deductibles is to purchase buyback coverage. Policyholders pay this additional premium — also called a wind/hail deductible buyback — to buy down an increment or two from the percentage tied to their primary property insurance.
The out-of-pocket savings toward deductibles can be significant. Consider the property owner carrying a 5 percent wind deductible which amounts to a $25,000 financial burden on a $500,000 piece of property. By adding a standalone wind buyback policy, the business owner could lower the deductible from 5 percent to 1 percent or to $5,000 from $25,000.
The cost of a separate deductible buyback policy can range between 4 percent to around 12 percent of the primary policy depending on characteristics of the property including location, construction, occupancy, and more.
To get a Proposal on Wind/Hail Buy Back Coverage contact our Agency. We have a GREAT market through Orchid Insurance.
Much of the above information came directly from an article from Orchid Insurance – Vero Beach, Florida