Named Storm and Wind Percentage Deductible

In coastal and wind-exposed states, wind and named storm losses carry a percentage deductible calculated on insured value rather than a flat dollar amount. A five percent deductible on a facility insured for $20M to $30M is a seven-figure retention that applies before any recovery, and it commonly applies per location rather than per event.

Two things make this worse in senior care than the arithmetic suggests. First, the deductible has to be funded immediately after an event that has also just disrupted census and revenue, so the cash demand and the cash shortfall arrive together. Second, evacuation costs are usually incurred before any physical damage occurs, and if the policy requires direct physical loss to trigger, a precautionary evacuation ordered by a governmental authority may produce large uninsured expense with no covered damage at all. Check for civil authority and ingress and egress extensions, check whether evacuation expense is specifically covered, and confirm whether the percentage applies per location or per occurrence, because in a multi-building portfolio that distinction is worth millions.