Wind Buy-Back Deductibles: A Creative Option

At a time when policyholders are facing higher premiums and a greater probability of hurricane damage, agents need as many tools as possible to assist their clients in having adequate coverage. One area that is especially of focus is wind deductibles. Retail agents have become all too familiar with the changes that insurance carriers have made concerning wind deductibles. Over the past several years, deductibles have reached higher levels that include deductibles of two percent, three percent, and five percent. Deductibles of seven and 10 percent are seen as well.

Wind buy-back insurance is one product agents can offer to their clients, which provides an option for policyholders to lower their wind deductible under a separate policy. The wind buy-back policy exclusively covers wind damage and it serves to help satisfy a homeowners’ deductible, which must be exhausted before the homeowners’ policy applies. Thus a policyholder whose property sustains hurricane damage must first pay their deductible, after which the wind buy-back policy applies, and finally their regular homeowners’ policy. The availability of the buy-back coverage is always subject to market conditions, i.e., capacity and reinsurance.