A deductible is the part of a covered loss you pay before insurance pays the rest. Many homeowners know their standard deductible, the one that applies to a kitchen fire or a burst pipe. Fewer realize their policy may have a separate deductible for certain storms, and that it can work quite differently. Storm season is the right time to find out.
The standard deductible
Most homeowners policies have a general deductible, sometimes called an all-perils or all other perils deductible, that applies to most covered losses. It is usually a flat dollar amount chosen when the policy was written. A higher deductible generally lowers the premium and a lower one raises it, a trade-off between what you pay every year and what you would pay out of pocket after a claim.
Wind, hail and named-storm deductibles
In many areas, damage from wind or hail falls under its own deductible. In coastal regions, policies may instead have a hurricane or named-storm deductible that applies when damage comes from a tropical storm or hurricane. Some policies have both. The details vary by insurer and by state, and some states set rules about when these deductibles apply and how often they can be charged in a single season.
The trigger matters. A named-storm deductible typically applies only when damage is caused by a storm that meets the policy’s definition, such as one named by the National Hurricane Center or one for which a watch or warning was issued, and it may apply for a set period afterward. Damage from an ordinary summer thunderstorm may fall under the wind and hail deductible or the standard one, depending on the policy.
Percentages versus flat amounts
Storm deductibles are often a percentage of the dwelling coverage limit rather than a flat amount, and that difference catches people off guard. A percentage deductible grows with your coverage, so on a home with a high dwelling limit, even a small percentage can add up to a large out-of-pocket figure. Ask your agent to translate the percentage on your declarations page into an actual dollar amount, so you can plan your savings around a real number.
When the deductible is larger than the damage, there is no payment for that claim. Minor hail damage to gutters or a handful of missing shingles, for example, may cost less to repair than the deductible.
Where to find yours and what to ask
Look at your declarations page, which lists deductibles and coverage limits, and at any endorsements that modify the policy. Then ask a licensed insurance professional:
- Which deductible applies to wind, hail, hurricanes and named storms, and what triggers each one?
- What is each deductible in dollars at my current coverage level?
- What other deductible choices are available, and how would they affect my premium?
- Does my lender limit how high a deductible I can choose?
- If more than one storm causes damage in a season, how are deductibles applied?
Once you know the number, consider setting that amount aside in an emergency fund. The deductible you can comfortably cover is part of the decision, not just the premium. Your agent can show you how different choices compare, and a financial advisor can help you weigh the trade-off against your other goals.
A Worked Example: Two Storms, Two Deductibles
Seeing how deductibles might apply in practice can make the concept clearer. The following is a hypothetical illustration; actual results depend on your policy and state rules.
Imagine a homeowner with a dwelling limit of $250,000, a standard deductible of $1,000 and a wind and hail deductible of 1 percent, or $2,500. Early in the summer, a severe thunderstorm drops hail that dents gutters and damages a section of roof. The repair estimate is $4,000. Under this policy, the wind and hail deductible would apply, so the homeowner would pay the first $2,500, and the remaining $1,500 would be considered for payment under the policy’s terms.
Later that year, a falling limb from a dead tree breaks a window during calm weather. Because the cause is not wind or hail, the standard $1,000 deductible may apply instead. If the repair costs $800, it falls below the deductible, and the homeowner would likely pay the full amount.
This example shows why knowing which deductible applies to which cause matters as much as knowing the amounts themselves.
Building a Storm Deductible Fund
A deductible is easier to handle when the money is already set aside. A simple approach:
- Find your largest deductible in dollars. For many homeowners in storm-prone areas, this is the wind, hail or named-storm deductible.
- Set a savings target. Aim to keep at least that amount in a separate account you can access quickly.
- Save in steps. If the full amount feels out of reach, set aside a fixed amount each month until you get there.
- Revisit it every year. If your dwelling limit increases at renewal, a percentage deductible increases too.
- Keep it separate from your general emergency fund if possible. That way, a storm does not leave you without a cushion for other surprises.
Mistakes Homeowners Make With Storm Deductibles
- Choosing a high deductible only for the lower premium. Savings on the premium are only helpful if you can afford the deductible when you need it.
- Not reading the endorsements. Separate deductibles are often described in endorsements attached to the main policy.
- Assuming every storm triggers the hurricane deductible. The trigger language in your policy decides which deductible applies.
- Waiting to make changes until a storm forms. Insurers may not allow changes once a storm is threatening.
Questions Homeowners Ask About Deductibles
Is the deductible subtracted from my claim payment or paid to the contractor?
Typically, the insurer subtracts the deductible from the amount it pays, and you are responsible for covering that portion of the repair cost yourself.
Can a contractor waive my deductible?
Be cautious of any offer to waive or absorb a deductible. In some states, this practice may be restricted. Ask your insurer or a licensed professional before agreeing to anything like this.
Does my deductible apply to my contents as well as the house?
In many policies, one deductible applies per covered loss, rather than separately to the dwelling and contents. Your agent can explain how yours works for your specific coverage.
