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.
A wind/hail deductible is a bit different than the deductibles for other types of small business insurance, but it's still the amount you must pay before your insurer will cover a claim. You might see this deductible on your commercial property insurance, which usually covers damage from high winds and hailstorms.
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.
Claims from windstorms and hail damage are the third most common among small business policyholders. Wind and hail damage account for about 15% of small business insurance claims, according to insurance company The Hartford. The average claim costs $26,000.
Coastal states are high-risk areas for hail and wind damage from hurricanes and tropical storms, so small businesses there will want to ensure their policies contain a wind/hail deductible – and possibly a hurricane deductible as well. A wind/hail deductible is also common in areas of the country that are prone to damage from hail and tornadoes, such as Texas, the Great Plains, and the Midwest.
It’s important to check with your insurance agent to make sure you’re covered for wind and hail damage, and check what amount your deductible is set at to ensure you have the means to pay it in an emergency.
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. In some areas, such as the Atlantic and Gulf Coast, a named storm deductible kicks in at a higher percentage of the damage when the National Weather Service names a hurricane or tropical storm, like Hurricane Katrina.
For example, if you had commercial property insurance with a $1,000 standard deductible and a 5% wind/hail deductible, your out-of-pocket cost on a $50,000 damage claim (from fire, etc.) would be $1,000 as derived from your set standard deductible. However, for a wind or hail-related event, your cost would be $2,500 as derived from the percentage in your 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.
If you’re in an area at risk of tornadoes, hurricanes, and hail, it’s important to make sure that your business is adequately protected, both physically and financially.
Checking your insurance coverage and being aware of your deductible amount are ways of staying financially protected. Make sure you read the declarations page on your policy and look for any exclusions on coverage for storm damage or a wind deductible.
If you’re not covered, and your area is prone to wind or hail damage, it’s a good idea to consider adding windstorm insurance to your coverage.
The Insurance Information Institute has information on hurricane and windstorm deductibles by state, so, you can see if your state is one of the 19 that have hurricane and windstorm deductibles.
Regular roof inspections, impact-resistant windows, and securing your equipment are some of the ways that you can protect your business from wind and hail events. Use common sense and look to neighboring businesses for other ways to protect your property.
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