Wind and hail deductible

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.

In some states—especially in hurricane-prone areas—your policy may also include a separate named storm or hurricane deductible. This only applies when a storm is officially named by the National Weather Service (such as Hurricane Ian).

Named storm deductibles are often higher than standard wind and hail deductibles and may range from 2% to 10% of your insured value. That means your out-of-pocket responsibility could increase significantly after a major weather event.

Claims from windstorms and hail damage are the third most common among small business policyholders, with coastal states being 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 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.

Wind and hail deductibles are often based on a percentage of your building’s insured value, not a flat dollar amount. 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.

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 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.

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.

Some insurers offer options to help reduce your financial exposure from wind and hail losses. One common strategy is a wind/hail deductible buy-back.

A buy-back allows you to pay a slightly higher premium in exchange for lowering your percentage deductible—for example, from 5% down to 2%. This can make a major difference in how much cash you need on hand after a storm.

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