When was the last time you calculated your wind/hail deductible in dollars—not just percentages?
Across storm-prone regions, most property insurance policies apply wind/hail deductibles as a percentage of the insured building’s value, not the size of the loss. That distinction is critical. A “2% deductible” on a $50 million property isn’t 2% of the damage—it’s $1 million out-of-pocket before insurance coverage even begins.
On paper, 2% looks harmless. In reality, it can change investor calls, cash flow, and how quickly you recover after a storm.
This is where too many organizations are caught off guard. Deductibles aren’t calculated off the loss amount—they’re based on the insured value of the building. And depending on policy language, endorsements, or carrier interpretation, you might be carrying more exposure than you think.
So, what can you do if your organization is uncomfortable carrying that much deductible risk? One increasingly popular solution is wind deductible buy-down insurance.
A buy-down policy is a separate layer of coverage that sits on top of your property program. Its purpose is simple: it lowers the deductible you’d have to pay out-of-pocket after a wind or hail event.
Here’s how it works:
- Your primary policy sets a 2% wind/hail deductible ($1M exposure).
- A buy-down reduces that exposure to 1% or even a flat dollar amount ($500K), with the buy-down policy covering the difference.
- Instead of facing a seven-figure deductible, your outlay is capped at a more manageable level, with only the cost of the buy-down premium to factor into planning.
For companies managing large portfolios or operating under tight financial expectations, this is a powerful tool. It transforms what could be a devastating surprise into a predictable, budgeted number.
The bottom line: storms are inevitable. Surprises don’t have to be. Now is the time to run the math, know your exposure in dollars, and explore options to minimize that risk.
For more information on how to review your numbers and see if a buy-down solution makes sense for you, contact John.George@MarshMMA.com.
