Market & Policy · Insurance Term
Deductible
Definition
A deductible is the part of a covered loss you pay before the insurance company pays. On commercial property policies it may be a flat dollar amount, such as $10,000, or a percentage of the building's insured value, often for wind, hail or named storms. Higher deductibles generally lower the premium.
In Plain English
Most property policies have more than one deductible. An all other perils deductible applies to fire, theft and most other causes. A separate wind and hail deductible or named storm deductible often applies to storms, and it is frequently a percentage deductible, meaning a percentage of insured value, not of the loss.
Deductibles usually apply per occurrence. On multi-building policies, the wording decides whether a deductible applies to each building or once across all buildings. Many percentage deductibles also have a dollar minimum, and business income losses may use a waiting period measured in hours instead of dollars.
Choosing a deductible is a cash-flow decision. Pick an amount you could actually pay after a bad storm, for every building that might be hit at the same time.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical and simplified: A building is insured for $2,000,000 with a 2% wind and hail deductible. Hail causes $150,000 of covered damage. The deductible is 2% of $2,000,000, or $40,000, so the insurer would pay about $110,000. With a $25,000 flat deductible instead, the owner's share would be $25,000.
Why It Matters for Texas Property Owners
Percentage wind and hail deductibles are common in Texas because of the state's hail and hurricane exposure. Texas had more major hail events than any other state in 2025, according to III and NOAA data. Coastal owners insured through TWIA for wind have a separate wind policy with its own deductible.
What to Watch For
- Find every deductible on your dec page, since all other perils, wind and hail, named storm, flood and equipment breakdown can all differ.
- For percentage deductibles, work out the dollar amount for each building before a storm, not after.
- Check whether the deductible applies per building, per location or per occurrence.
- Ask about a deductible buy-down if a percentage deductible is more than you could comfortably pay.
Common Questions
Is a 2% deductible 2% of the damage?
No. A percentage deductible is usually a percentage of the building's insured value (or the values at the location), not of the loss. On a $3 million building, 2% is $60,000 regardless of the size of the claim.
Does raising my deductible always save money?
It often lowers the premium, but the difference varies and isn't guaranteed. Weigh the premium change against what you would pay out of pocket in a likely loss.
Sources
Last updated October 14, 2026 · Primesure editorial team · How We Write