Named Windstorm Clause
The named windstorm clause imposes a distinct, usually percentage-based deductible for losses caused by an officially named tropical storm or hurricane, set higher than the general property deductible.
- Clause type
- Exclusion
- Origin/Market
- US market
- Favours
- Insurer
- Negotiability
- Market standard
Purpose
In US states exposed to hurricanes, particularly along the Gulf and Atlantic coasts, property insurers frequently apply a distinct, substantially higher deductible to losses caused by a tropical storm or hurricane that has been officially named by the national weather authority, compared with the deductible for other property damage. The named windstorm clause defines when an event qualifies as a “named storm” (usually once an official storm or hurricane warning has been issued for the affected region) and sets the resulting deductible, typically expressed as a percentage of the sum insured rather than a fixed amount.
Effect and limits
Because the deductible is calculated as a percentage of the sum insured at the affected location, it can quickly become a substantial amount for high-value properties, which can create a considerable deductible burden in group programmes with several exposed locations. The precise definition of the triggering event and of when the storm period begins and ends varies between insurers and states and is in part prescribed by local regulatory rules.
Negotiation and practice
When structuring a programme for US locations in coastal regions, policyholders should check whether a cap can be agreed on the deductible amount and how multiple named storms within a single period affect the deductible calculation.