Named Storm (Hurricane) versus Wind and Hail (windstorm) Deductibles...
Overview: A deductible is the amount of loss paid by the policyholder before any loss is paid by the insurer. For most “perils” (such as fire damage and theft), the standard deductible is a flat dollar amount (e.g., $500 or $1,000). This means a policyholder would be responsible to pay the flat dollar amount out of pocket for a loss.
Recommendation:
I would always recommend a Named Storm deductible if given the option due to having coverage for wind and hail (windstorm) at the regular All Other Peril (AOP) deductible which is usually $1,000 or $2,500 instead of a higher amount which is usually a percent of the total Home Dwelling coverage.
An example:
A home owner has $300,000 of coverage on their home. A bad wind storm or tornado came through and blew their roof off. If this person had a $1,000 AOP deductible along with a 5% wind and hail deductible then they would be responsible for the first $15,000 ($300,000*5%). However, if they had a Named Storm deductible then they would simply be out the AOP deductible of $1,000.
Deductibles:
I: Named Storm / Hurricane
- Named Storm deductible applies to a weather event declared as a hurricane, typhoon, tropical storm or cyclone by the U.S. National Weather Service, the U.S. National Hurricane Center or the U.S. National Oceanic and Atmosphere Administration, and where a number or “name” has been applied (e.g., Hurricane Andrew, Superstorm Sandy, etc.). Any loss must have been caused or resulted from the named storm event.
-Hurricane deductible applies to damage solely from a hurricane as categorized by the National Weather Service or U.S. National Hurricane Center.
II: Wind and Hail (windstorm)
-Wind and Hail (windstorm) deductible may apply to any kind of damage from a wind or hail event. For example, if a tree falls on a policyholder’s roof on a windy day, the claim would be subject to the wind deductible.
III: Flood
Flood damage, however, is covered only if a separate flood insurance policy was purchased, generally from the National Flood Insurance Program or from a private company.
For other questions please feel free to give me a call.
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reference: http://www.naic.org/cipr_topics/topic_hurricane_deductibles.htm
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