Wind/Hail Deductibles

A wind/hail deductible refers to the amount of money a policyholder agrees to pay out-of-pocket for a covered claim resulting from wind or hail damage. While all policies include a flat deductible for property damage caused by a covered peril, insurance companies now commonly use a percentage-based wind/hail deductible, particularly on farm policies.  These percentage-based deductibles range from 1% to 5%, with a 1% or 2% most common, and impact on the amount you must pay out of pocket in the event of a wind or hail related loss. Wind and hail damage are the two most severe weather-related losses for the insurance industry.

With a percentage-based wind/hail deductible, the deductible is equal to a percentage of the limit that a covered building is insured for. For example, let’s say your barn is insured for $750,000 with a 1% wind/hail deductible and $5,000 deductible for all other perils. If the barn were to be damaged by fire, the $5,000 flat deductible would apply. However, in the event that the barn is damaged by wind or hail, the deductible would be 1% of that $750,000 limit, or $7,500. It is important to note that a percentage-based wind/hail deductible is calculated based on the insured value of the property – not a percentage of the total loss amount.