Many HOA boards look closely at the insurance premium, total building limit, and covered property. However, the deductible can be just as important, especially when the policy has a separate wind or hail deductible.
A wind/hail deductible is the amount the association must pay before the insurance company begins paying for a covered wind or hail claim. For an HOA, this can apply to roofs, siding, gutters, fencing, clubhouses, garages, shared structures, or other property the association is responsible for under the master policy.
HOA property insurance, often called an HOA master policy, is designed to help protect buildings and common areas the association is responsible for. It may include coverage for roofs, hallways, lobbies, pools, fences, clubhouses, and other shared property, depending on the governing documents and policy terms. StarNet’s HOA property insurance page also notes that wind, flood, and other catastrophe options may need separate evaluation depending on the community’s location and budget.
What Is a Wind/Hail Deductible?
A wind/hail deductible is a special deductible that applies when damage is caused by windstorm or hail. This deductible may be different from the regular property deductible on the HOA master policy.
For example, your policy may have:
A $10,000 deductible for fire, vandalism, or certain other covered losses.
A separate 2% wind/hail deductible for damage caused by wind or hail.
That difference matters because wind and hail claims are often roof-related, and roof claims can be expensive for condo associations, townhome associations, and planned communities.
The National Association of Insurance Commissioners explains that windstorm or wind/hail deductibles usually apply to damage from wind or hail events, and these may be separate from standard deductibles or hurricane/named storm deductibles.
Flat Deductible
A flat deductible is a specific dollar amount.
For example:
$5,000 wind/hail deductible
$10,000 wind/hail deductible
$25,000 wind/hail deductible
$50,000 wind/hail deductible
This is usually easier for the board and homeowners to understand. If the HOA has a $25,000 flat wind/hail deductible and the covered wind damage is $300,000, the association is responsible for the first $25,000, and the insurance company handles the covered amount above that, subject to the policy terms.
A flat deductible is predictable. The board can plan for it in reserves and explain it more easily to homeowners.
Percentage Deductible
A percentage deductible is calculated as a percentage of the insured value, not simply as a percentage of the claim.
For example, if a building is insured for $2,000,000 and the wind/hail deductible is 2%, the deductible is:
$2,000,000 x 2% = $40,000
If the covered wind or hail damage is $150,000, the association may still need to pay the first $40,000 before the carrier pays the remaining covered amount.
This is why a small percentage can become a large dollar amount on an HOA master policy. A 1%, 2%, or 5% deductible may not sound high at first, but when it is applied to a multi-building community, the number can become significant.
The North Carolina Department of Insurance gives a simple example for residential property: a 1% wind or hail deductible on $200,000 of coverage equals $2,000 out of pocket for every wind or hail related claim.
Per Building vs. Per Location
HOA boards should also ask how the percentage deductible is applied.
Some policies apply the deductible per building. Others may apply it per location, per occurrence, or to the total insured value shown on the schedule.
This can make a big difference.
If your community has ten buildings insured for $1,000,000 each and the policy has a 2% deductible per damaged building, the deductible may be $20,000 per damaged building.
If the policy applies 2% to the entire $10,000,000 property schedule, the deductible could be $200,000.
Both are percentage deductibles, but the financial result is very different.
Why This Matters for HOA Boards
A wind/hail deductible affects more than the insurance claim. It can affect the association’s reserves, budget planning, special assessments, and homeowner expectations.
If the deductible is high, the HOA should know how it would pay that amount after a storm. Some associations may use reserves. Some may need a special assessment. Some may consider deductible buy-down coverage or other risk-planning options.
This is also why homeowners should understand their own unit-owner policies. Many unit-owner policies may offer loss assessment coverage, which can help with eligible assessments from the association. StarNet’s HOA insurance page notes that loss assessment planning matters when a master policy has a large deductible or shortfall.
Percent vs. Flat: Which Is Better?
There is no single answer for every HOA.
A flat deductible may be easier to budget for, but it may come with a higher premium or may not be available in certain markets.
A percentage deductible may help keep coverage available or premium more manageable, but it can create a much larger out-of-pocket cost after a storm.
The right choice depends on:
The number of buildings
The total insured value
The roof age and roof type
The community’s claim history
The location and weather exposure
The HOA’s reserve strength
The association’s governing documents
The expectations of homeowners and lenders
A lower premium does not always mean the better option if the deductible is too high for the association to realistically pay after a loss.
Check the Declarations Page
The first place to look is the insurance declarations page. This is where the deductible is usually listed.
The board should look for terms such as:
Wind/Hail Deductible
Windstorm Deductible
Named Storm Deductible
Hurricane Deductible
All Other Perils Deductible
AOP Deductible
Per Building Deductible
Per Occurrence Deductible
If the policy has more than one deductible, ask your insurance agent to explain which deductible applies to which kind of loss.
This is important because a regular deductible may apply to one claim, while a separate wind/hail deductible may apply to another.
Review the HOA Documents
The HOA’s governing documents may explain who is responsible for damage, deductibles, and assessments.
For example, the association may be responsible for the roof and exterior structure, while the unit owner may be responsible for interior improvements, personal property, or certain repairs inside the unit.
The master policy and the governing documents should work together. If they do not match, the board may face confusion at claim time.
This is especially important for communities with bare walls, walls-in, or all-in coverage. StarNet notes that HOA master policies may cover different “lines” inside the unit depending on whether the community is set up as bare walls or single entity/all-in coverage.
Lender Requirements May Also Matter
For condo, co-op, and some planned development projects, lender requirements can also be important. Fannie Mae’s current master property insurance requirements state that, when a master policy is required, the policy must cover common elements and residential structures, and it lists windstorm and hail among required perils for certain project coverage requirements.
Fannie Mae also states that the maximum allowable deductible for required property insurance perils is generally 5% of the master property insurance coverage amount, and it provides additional rules when a master policy has multiple deductibles, such as a separate deductible for windstorm or roof damage.
This does not mean every HOA policy is automatically acceptable for every lender situation. It does mean HOA boards should review deductible structure carefully, especially when owners may be buying, selling, or refinancing units.
Questions HOA Boards Should Ask
Before renewal, the board should ask:
What is our regular property deductible?
Do we have a separate wind/hail deductible?
Is the wind/hail deductible flat or percentage-based?
If it is percentage-based, what value is the percentage applied to?
Is it per building, per occurrence, per location, or per schedule?
How much would the deductible be in a realistic roof claim?
Can the association pay that amount from reserves?
Would homeowners be assessed?
Should homeowners review loss assessment coverage with their own agent?
Are deductible buy-down options available?
These questions can help the board compare policies more accurately. Two policies may look similar, but the deductible language can create very different results after a claim.
Example for an HOA
Assume an HOA has five buildings insured for $1,500,000 each.
Total insured value: $7,500,000
Wind/hail deductible: 2%
If applied to the total schedule: $150,000 deductible
If applied per damaged building: $30,000 per damaged building
If one building is damaged, the difference may be $30,000 vs. $150,000 depending on how the policy is written.
That is why the board should not only ask, “What is the deductible?”
The better question is:
“How is the deductible calculated when a wind or hail claim happens?”
FAQ About HOA Wind/Hail Deductibles
What is a wind/hail deductible for an HOA?
A wind/hail deductible is the amount an HOA must pay before insurance applies to a covered wind or hail claim under the master policy. It may be a flat dollar amount or a percentage of the insured property value.
Is a 2% wind/hail deductible the same as paying 2% of the claim?
Usually, no. A percentage deductible is often calculated from the insured value of the building or property schedule, not from the claim amount.
Why do HOA wind/hail deductibles seem so high?
HOA master policies often insure multiple buildings and shared structures. Even a small percentage can become a large dollar amount when applied to millions of dollars in insured property value.
Can HOA homeowners be assessed for a wind/hail deductible?
Sometimes, yes. It depends on the HOA governing documents, state law, policy language, and how the board handles deductible funding. Homeowners should ask their personal insurance agent about loss assessment coverage.
What should an HOA board review before accepting a wind/hail deductible?
The board should review whether the deductible is flat or percentage-based, what value it applies to, whether it is per building or per occurrence, how it would be funded, and whether homeowners understand the potential assessment risk.
Final Thoughts
Wind and hail deductibles can be one of the most important parts of an HOA master policy. A flat deductible is usually easier to understand. A percentage deductible may be more common in higher-risk areas, but it can create a much larger financial responsibility for the association.
Before renewal, the HOA board should review the declarations page, deductible wording, property values, governing documents, reserve funds, and loss assessment planning.
At StarNet Insurance Group, we're here to help you navigate the complexities of insurance. Please feel free to contact us with any questions you may have.
