Wind and Hail Deductible vs. Hurricane Deductible

One of the most frequently misunderstood policy provisions of the church insurance policy is the wind and hail deductible (henceforth, refered to as the “wind deductible”).  Failing to educate your church on the wind deductible could leave you unprepared for the huge out-of-pocket costs that come with it.

There are four big things you need to know to help you prepare for wind losses to your property:

1. A “wind deductible” is not the same thing as a “hurricane deductible”.  A wind deductible applies to all covered losses resulting from wind and hail while a hurricane deductible applies only to hurricane (or, in some cases, “named storm”) related losses.  In other words, a loss resulting from a tornado that hits Jacksonville in May is subject to the same wind deductible as the one used in November when a hurricane rolls through.  In contrast, a “hurricane deductible” won’t be used for the May tornado; the insurer will apply the standard flat deductible instead.  However, the hurricane deductible will be applied on the November hurricane.  Very few companies use a hurricane deductible for commercial property so you probably have a “wind and hail deductible” on your church buildings.  Church owned residential buildings are the frequent exception.
2. Both the wind and hail deductibles are equal to a percentage of the limit of insurance, not the amount of the claim.  This is very important and almost always a surprise to the church.  Suppose you have a 5% wind and hail deductible and a building insured for $1,000,000.  If you have a wind related loss of $300,000 the deductible is not $15,000 (5% of the amount of loss) it will be $50,000 (5% of the $1,000,000 building limit).  Big difference.
3. Unlike the flat property deductible which applies per occurrence, the wind deductible (and the hurricane deductible) usually apply per limit.  For example, if you have three buildings and the contents of those three buildings insured on your policy, you have six limits.  A wind or hail loss involving all the buildings and all the contents of those buildings will result in the application of six different deductibles.
4. Just like the flat deductible, the wind and hail deductibles and hurricane deductibles apply per loss.  So, if three storms hit your property on three different occasions, you will probably see the application of the wind deductible all three times.  (Of course, the insurer has to prove that three storms hit your buildings, something that was hard to do back in 2004.  And yes, the state could step in and refuse to let insurers apply three different deductibles, just like they did in 2004.  But, barring that, the policy language is clear on this application.)

Your church needs to be prepared for a wind loss as it could mean the outlay of serious money to make repairs.  Talk with your leaders, understand the real dollars at stake and come up with a plan for dealing with the wind and hail property loss before it happens.