Standard home insurance policies typically have some sort of small deductible that the homeowner is required to pay in order for the insurance coverage to kick in in the event of damage. Windstorm insurance policies also have deductibles, but these deductibles can differ depending on the severity of the storm and what kind of storm it is. A named storm deductible is one of these.
What is a named storm?
Named storms are typically the severest form of storms that occur. Historically named storms have been reserved for hurricanes, tropical storms, and tropical depressions; however, in recent years some of the most severe winter storms have been named as well. These storms notoriously cause huge amounts of damage that lead to large repair costs for homeowners and insurance companies.
What is windstorm insurance?
A brief overview of windstorm insurance is that it is a type of insurance that is available to homeowners who have a standard home insurance policy that excludes wind damage from coverage. These policies are most relevant and needed in places where severe wind occurs, especially where named storms are common. Typically, the part of the country where this is the case is along the Gulf coast and the Atlantic coast. Insurers typically exclude wind coverage from their standard policies in these high-risk coastal areas to keep insurance premiums low for homeowners and protect themselves from the common peril of severe wind.
What is a named storm deductible?
Windstorm insurance typically has a few different deductibles that will kick in at different times depending on the severity of a storm. The three deductibles normally included are:
- Wind and hail deductibles – meant for common windstorms.
- Named storm deductibles – meant for windstorms that have been named by the National Weather Service or other appropriate entity.
- Hurricane deductibles – meant for the most severe storms where the named storm has been determined to reach the level of a hurricane.
Named storm deductibles will kick in extreme weather cases as named storms are some of the most severe forms of the wind peril. This deductible is usually the middle of the three deductibles that the homeowner may be subjected to under a windstorm insurance policy. This deductible will come into play when damage is caused to the homeowners property by a named storm that hasn’t been upgraded to the level of a hurricane.
How does a named storm deductible work?
There are two different ways a named storm deductible may work: a flat dollar amount and a percentage amount. The much rarer form a named storm deductible may take place is the flat dollar amount. In this case, the policy will state a specific dollar amount that the homeowner must pay for coverage to be provided in the event of damage. For example, the policy may say that when damage is caused by a named storm the deductible is $3,000.
The much more common form a named storm deductible takes place is a percentage amount. Typically, this percentage is between one and five percent of the maximum dwelling coverage limit under the homeowner’s standard home insurance policy. An example is, say the dwelling coverage limit is $300,000 and the named storm deductible is 3% of the dwelling coverage limit. In this case, the homeowner would have a $9,000 deductible in the event that damage is caused by a named storm before the insurance coverage would kick in.
The named storm deductible can be a bit confusing and may apply to some people who are hit by the storm while it is officially a tropical storm, but then wouldn’t apply to other people who have damage caused by the same storm that has since been upgraded to a hurricane. Read through your windstorm policy to understand your specific coverage.
