Deductible Buy Back For Wind, Earthquake, Flood and Other Perils

At a time when policyholders are facing higher premiums and a greater probability of hurricane and wind damage, agents need as many tools as possible to help ensure they provide adequate coverage for their clients.

Wind

Higher property values and higher wind deductibles are increasing the overall exposure for insureds, especially in coastal, hurricane prone states. In today’s litigious environment, it is important to regularly advise clients of all the optional coverage available to reduce the potential for financial loss in the event of a storm. The same can be said in earthquake or flood prone areas.

Deductible buy back (DBB) insurance is one product that you can offer to your clients, which provides an option for them to reduce their financial burden following a loss by lowering their deductible under a separate policy.

For example, on a $1,000,000 property, a five percent wind deductible equals $50,000. Let’s say your client would like to reduce that to a one percent wind deductible. Under a wind buy-back policy, the insured, under a separate policy, could cover four percent of the five percent deductible. Instead of the insured having a $50,000 out of pocket exposure it would now be $10,000.

The price of a deductible buy-back policy varies greatly based on the specific COPE information and perils covered. That being said, pricing can range from four percent — 12.5 percent of the DBB policy limit.

In the above example ($40,000 DBB limit), the four percent rate would equate to a premium of $1,600 whereas the 12.5 percent rate would equate to a premium of $5,000.

This product is an excellent solution to reduce out of pocket costs for property owners that may need to comply with mortgage or loan terms.

To find out what UIG can do you for you, please download our Deductible Buy Back app. You can return the completed form to info@uigusa.com.

We’ve also started a Young Agent’s Resource Group on LinkedIn. Whether you’re new to insurance or are just looking for a few new ideas, be sure to connect with us!