What it does
CP 03 21 applies a percentage deductible to covered loss or damage caused directly or indirectly by Windstorm or Hail at the premises and buildings shown in the Schedule. The percentage, 1%, 2% or 5%, applies to each occurrence of windstorm or hail.
How the deductible is calculated
- A separate deductible applies to each building that sustains damage, to the personal property at each building, and to personal property in the open.
- Under specific insurance (a separate limit per item), the percentage is applied to the limit of insurance on the damaged item.
- Under blanket insurance, the percentage is applied to the value of the damaged property as reported on the latest statement of values on file with the insurer.
- Builders risk and value-reporting forms have their own calculation rules in the endorsement.
- Property covered under the newly acquired or constructed property extension uses the highest percentage in the Schedule.
- After the deductible, payment is still subject to any reduction under the coinsurance condition, the agreed value option or value-reporting provisions.
Who needs it
Underwriters impose it in hurricane and severe convective storm territories. Lenders may set maximum acceptable deductibles, so check loan covenants before agreeing to 5%.
Quoting and selling notes
- Show the client the dollar amount. A 2% deductible on a $5 million building is $100,000 per building for each storm.
- Higher percentages lower premium. Compare with excluding wind entirely (CP 10 54) and placing it in a wind pool, and with roof surfacing limitations (CP 10 36).
- A flood deductible is separate if flood is covered.
