What is a Wind Deductible Buyback?
By Chris Barnes, Socius Insurance Services Vice President
With insurance costs rising and CAT deductibles increasing, you need options. What is a Wind Deductible Buyback?
Whether you own a business or a home you have a financial responsibility to take care of that property and its contents. As we go through another season of Hurricane, Tornado and any other CAT exposures you need options when it comes to your insurance deductibles.
Deductible Buybacks or Deductible Buy-downs are one in the same. This option gives the client a way to mitigate first dollar losses on their risks. The buyback option can be used on a single location or on a schedule of locations across the country. This is a separate policy usually written with separate carrier from your primary carrier. In order to purchase a buyback policy, you will pay a higher premium for a lower deductible to help you with expenses in case of a CAT loss.
Not only do we have CAT buy-downs but we can also do the AOP as well. AOP Buy-downs are more difficult and less carriers are wanting to do them unless we have large AOP deductibles. If your client has a consistency issue with AOP losses, then this may help your client out in reducing out of pocket monies at the time of loss.
Who benetfis the most from a Buy-down policy?
The types of insureds that benet the most from a buy-down are the insureds that have budgets in place and do not have cash in hand to pay high deductibles.
- Examples below of risks that utilize buy-downs more than others.
- Homeowners
- Places of Worship
- Hotel/Motel
- Condo Associations/HOA’s
These are just a few risks that utilize a buy-down policy due to budget concerns. With this in mind, no insured wants to have a large deductible hurt their bottom line.
Keep in mind that over the years we have seen this product move from the CAT exposed areas into more of the convective storm areas due to the increase in percentage deductibles that are starting to be seen in the non-CAT areas. These clients are not used to seeing percentage deductibles so this product may be perfect for your next risk.
Socius has many facilities that can help with all your Buy-down needs through online access with instant quoting, our partners in London and our domestic carriers. Please reach out to your Socius broker and let us help you, help your client.