Why percentage deductibles surprise boards
A wind, hail, or named-storm endorsement may apply a percentage to one building’s insured value, each scheduled location, the property’s total insured value, or another value defined by the form.
A board should request a written dollar calculation for the specific event before announcing the association’s expected share.
The words ‘2% deductible’ do not establish the dollar amount until the endorsement, statement of values, and application method are read together.
Ask the broker in writing
- What policy form covers the association?
- Is wind and hail covered, excluded, or separately endorsed?
- What event triggers the deductible?
- Does it apply per occurrence, building, location, or total insured value?
- Are roofs settled at replacement cost or actual cash value?
- Is depreciation recoverable, and what deadline applies?
- What are the notice, proof-of-loss, repair, and suit deadlines?
- How may this claim affect renewal, eligibility, limits, deductible, or premium?
Insurance proceeds are not the whole budget
Even when coverage applies, the association may remain responsible for the deductible, excluded conditions, maintenance, code or upgrade items outside the approved scope, lender requirements, and any shortfall between approved funds and the board’s selected construction program.
Replacement cost benefits may be paid in stages. Initial actual-cash-value funds, recoverable depreciation, supplements, and association-funded work should be tracked separately.
How costs can reach homeowners
Regular assessments and special assessments are governance decisions, not automatic consequences of filing a claim. The board must compare insurance proceeds, reserves, deductible, uncovered work, governing documents, and approved budget procedures.
Association counsel should review the declaration or master deed and bylaws before the board assigns a deductible or announces how a shortfall will be allocated.
Reporting legitimate damage does not itself set dues. The financial plan and governing documents do.
Connect the claim to reserve planning
The final condition map, carrier scope, repaired items, excluded buildings, warranties, and remaining service-life assumptions should move directly into the reserve and capital file.
That prevents the next board from starting over and makes year 10, 20, 25, and 30 rehabilitation decisions more defensible.
PRIMARY SOURCES & FURTHER READING