Texas Wind & Hail Percentage Deductibles for Apartment Owners

A percentage wind and hail deductible is a formula, and it multiplies against insured value, not the size of your loss. A storm that dents forty condenser coils and a storm that destroys every roof trigger the same deductible. One building at $10,000,000 total insurable value:

$10M Building, Three Deductible Levels

• 1% wind/hail: $100,000 retained before any carrier payment
• 2% wind/hail: $200,000 retained
• 5% wind/hail: $500,000 retained
• All other perils: a flat deductible, often $10,000 to $50,000, still governs fire, water and theft. The percentage attaches only to wind and hail.

A hail event on a 200-unit garden community needing partial roof replacement plus condenser work lands in the mid six figures. At 1% that is largely recoverable. At 5%, a $400,000 hail loss produces zero recovery.

Two Mechanics Owners Miss

• Rising values raise your deductible: inflation-guard provisions lift insured value annually, so 2% costs more each year with no notice and no signature.
• Occurrence definition matters: Texas springs bring two or three hail systems in a week. Whether that is one occurrence or three is set by a time clause in the form, and each one is another deductible.

Percentage deductibles spread through Texas commercial property because hail became a frequency peril, not a rare catastrophe.

The Loss History Behind It

• May 5, 1995, Fort Worth: the Mayfest hailstorm produced roughly $1.1 billion in insured losses, the state record for two decades.
• April 12, 2016, Bexar County: an estimated $1.4 billion in insured losses per the Insurance Council of Texas, with costly events the same spring in Fort Worth, Plano and Wylie.
• 2016 statewide: hail losses exceeded $5 billion across more than 500,000 claims, and Harvey in 2017 and Winter Storm Uri in 2021 stacked on two more capital events.
• July 8, 2024, Hurricane Beryl: landfall near Matagorda, then damaging winds across Houston; Verisk estimated $2 to $3 billion in U.S. onshore property wind losses.
• Nationally: the Insurance Information Institute reports U.S. severe convective storm insured losses have topped $50 billion three years running, hail the dominant claims driver, accounting for as much as 80% of severe convective storm claims.

Multifamily sits at the center because of geometry: a garden community carries enormous roof surface, exposed HVAC, siding and carports relative to insured value. A flat $25,000 deductible on a $10,000,000 complex is a 0.25% retention; on $40,000,000 it is 0.0625%. Percentages hold the carrier's exposure constant as values grow. Today 2% is the inland benchmark, and surplus lines placements on older frame product carry 3% to 5%. No Texas statute caps it. Your loan documents do.

On a single building the percentage is simple. On a community with eight, twelve or twenty structures on one schedule of values, the application language moves your retention by hundreds of thousands of dollars, and the declarations page looks identical either way. The standard ISO endorsement, CP 03 21 (Windstorm or Hail Percentage Deductible), applies the percentage to the value of covered property at time of loss, separately for each damaged building. Surplus lines forms deviate in both directions.

Worked Example: $8M Community, Six Buildings, Three Roofs Hit

Six buildings at roughly $1,333,000 each, total damage $600,000. All three scenarios read 2% Wind/Hail on the declarations page.

• Percentage of the damaged building's value: 3 x ($1,333,000 x 2%) = $80,000 retained; carrier pays about $520,000.
• Percentage of total values, once per occurrence: $8,000,000 x 2% = $160,000 retained; carrier pays $440,000.
• Percentage of total values, per damaged building: 3 x ($8,000,000 x 2%) = $480,000 retained; carrier pays $120,000 on a $600,000 loss.

Minimums compound it. A 1% per-building deductible with a $250,000 minimum, on a schedule of $1,500,000 structures, produces $250,000 per damaged building, not $15,000.

Pin These Down in Writing

• The multiplicand: damaged building value, total location value, or total policy value?
• The frequency: once per occurrence, per location, or per damaged building?
• Floors and caps: a minimum per building, and a per-occurrence cap on the stacking?

Appraisal will not rescue you: panels decide the amount of loss, not deductible language. Market pages: Dallas, Fort Worth, Houston, Austin and San Antonio.

With agency debt the deductible is not purely a business decision. These are the published maximums; verify against the live guide for your loan.

Fannie Mae Multifamily (Guide Part II, Chapter 5, Section 501.02B)

• Wind/hail: must not exceed 5% of Total Insurable Value; or, in dollars, $50,000 under $10 million of insurable value and $100,000 at $10 million or more.
• Named storm: must not exceed 7.5% of Total Insurable Value, or in dollars $50,000 under $10 million of insurable value and $100,000 at $10 million or more.
• All other perils: $50,000 / $100,000 on specific-limit policies, $250,000 per occurrence on a blanket limit.
• Business income: cannot exceed the property maximum, or a 3-day / 72-hour waiting period.
• Expanded deductibles raise the all-other-perils dollar cap to $100,000 under $10 million and $150,000 at or above — they do not lift the wind/hail or named storm percentage ceilings — and require liquid assets of at least four times the deductible, a Pass-rated loan not delinquent in the last 12 months, and a property condition rating of 2 or better.

Freddie Mac (Chapter 31) and HUD

• Freddie Mac: wind/hail 5% and named storm 7.5% of Total Insurable Value per occurrence, with the same $50,000 / $100,000 / $250,000 dollar maximums.
• Roof valuation: Freddie requires replacement cost, with actual cash value acceptable only for roofs — the exact concession carriers push for in Texas. Deductible waivers run one policy term and may be renewed.
• HUD/FHA: the maximum wind or named storm deductible was raised in 2024 to the greater of $50,000 or 5% of insurable value per location, capped at $475,000 per occurrence — up from $50,000 or 1% per building capped at $250,000.

An 8% or 10% deductible is not financeable with agency debt; Freddie Mac can waive its maximum for one policy term, renewable, and HUD allows a Regional Director waiver above 5% up to $1,000,000. Five percent is a ceiling, not a target.

Texas is two insurance states for this peril. Inland, wind and hail sit inside the commercial property policy. On the coast, wind is often stripped out of the base policy and replaced through the Texas Windstorm Insurance Association or private wind capacity.

TWIA Territory and Commercial Deductibles

• The catastrophe area is the 14 first-tier coastal counties: Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio and Willacy — plus parts of Harris County east of Highway 146, within the city limits of La Porte, Morgan's Point, Pasadena, Seabrook and Shoreacres.
• Deductibles are not freely chosen. TWIA's rating rules make 1%, 2% or 5% per item, per occurrence the only commercial options, and multiple deductibles on one policy are prohibited. Per item means per individually rated structure — twelve separate calculations for a twelve-building community in one hurricane.
• Limits are capped at a maximum liability set and periodically adjusted by the Texas insurance commissioner. Values above it need excess wind from surplus lines, with a second deductible.
• WPI-8 certificate of compliance: coastal construction and roof replacement generally must be certified through the Texas Department of Insurance windstorm inspection program to stay TWIA-insurable.

TWIA is written at actual cash value unless a replacement cost endorsement is added. See Corpus Christi and Houston, or call (512) 893-3795.

Three levers: reduce the hazard, transfer the retention to a second policy, or fund it deliberately.

Class 4 Roofs (UL 2218) and FORTIFIED

• The standard: UL 2218 rates roof coverings Class 1 through Class 4 by steel ball impact. Class 4 is the top rating, surviving repeated strikes from a 2-inch ball without cracking or splitting.
• TDI maintains the qualifying impact-resistant product list and the Class 1-4 ratings, but the discount itself is carrier-set — TDI states the amount is established company by company — and on commercial multifamily it is fully discretionary. Request it explicitly and document it with invoice, UL 2218 certification and install records.
• IBHS FORTIFIED Multifamily is a third-party-verified re-roofing standard with Roof, Silver and Gold levels plus a hail supplement. Texas has no statutory FORTIFIED discount, so its value is leverage and appetite.
• Watch the trade. The commercial cosmetic exclusion is ISO CP 10 36 (Limitations on Coverage for Roof Surfacing), letting a carrier value roof surfacing at actual cash value on a replacement-cost building and/or exclude marring and pitting from hail. A high percentage deductible plus CP 10 36 leaves hail coverage close to theoretical.

Deductible Buy-Down Coverage

• How it works: a separate standalone policy, usually surplus lines, sitting underneath the primary deductible. You retain a small amount, it funds the gap up to the primary's percentage deductible, and the primary responds above. A $10,000,000 schedule at 5% carries a $500,000 retention; a buy-down compresses that to a budgetable figure.
• Pricing is typically a share of the underlying property premium, commonly mid-single-digit to low-double-digit percentages before surplus lines tax.
• Follow-form is the whole game: confirm it mirrors the primary's occurrence definition and per-building versus per-occurrence application, or you get a gap mid-tower. On smaller schedules, minimum premiums plus taxes can exceed the value of the transfer.

Deductible terms are set 60 to 120 days before renewal, in the submission and the underwriter conversation. By the time the binder arrives, it is over.

Genuinely Negotiable Today

• Application language: the highest-value item. Moving from percentage of total values per building to percentage of the damaged building's value is worth more than a full percentage point.
• A per-occurrence maximum that stops per-building deductibles from stacking, plus a 72-hour occurrence clause so a multi-day hail sequence is one deductible.
• Roof valuation: resist a blanket move to actual cash value or a depreciation schedule; if the carrier insists, negotiate the age threshold. Ask for CP 10 36 to be removed.
• Credit for capital work: new roofs, impact-resistant coverings, FORTIFIED designations, hail guards, inspection programs — with invoices and photos.

Questions to Ask Before You Sign

• 1. What dollar amount would I have retained on my last hail loss under these terms?
• 2. Is the percentage applied to the damaged building's value, total values at the location, or total policy values?
• 3. Does the deductible apply once per occurrence or once per damaged building?
• 4. Is there a minimum dollar deductible, and does it apply per occurrence or per building?
• 5. How does the form define an occurrence for hail, and is there a time clause?
• 6. Is there a separate named storm deductible, and can hail ever fall under it?
• 7. Are roofs settled at replacement cost, actual cash value or an age schedule, and is CP 10 36 attached?
• 8. Do these terms meet my loan's maximum deductible requirement, and if not, was a waiver requested?
• 9. What would a buy-down cost, and which carriers declined and why?

If your broker cannot answer two, three and four from the policy language rather than memory, that is the answer.