Are you budgeting for your Nantucket purchase without factoring in wind deductibles? Many buyers are surprised to learn that a percentage of their home’s insured value can become their out-of-pocket cost after a storm. If you plan ahead, you can avoid last-minute lender issues and cash-flow shocks. In this guide, you’ll learn how wind and named-storm deductibles work on Nantucket, what lenders look for, and the exact steps to take before you close. Let’s dive in.
Wind vs named-storm deductibles
Wind deductibles apply to wind damage from any storm. Named-storm deductibles apply only when an official authority names the storm, such as the National Hurricane Center. Policies often list these deductibles separately from your standard all-perils deductible.
Most carriers tie the deductible to your dwelling coverage limit, also called Coverage A. Some policies use a different base, so always confirm how your carrier calculates it and what triggers apply.
How deductibles are calculated
Deductibles come in two formats: a percentage of Coverage A or a flat dollar amount. On Nantucket, percentage-based named-storm or wind deductibles are common. Typical ranges are in the low single digits, often 1% to 5%, with higher percentages possible in high-risk situations.
Here are example costs for a $1,000,000 Coverage A limit:
- 1% deductible = $10,000
- 2% deductible = $20,000
- 3% deductible = $30,000
- 5% deductible = $50,000
With high-value island homes, a small percentage can equal a large dollar amount. Some carriers offer an endorsement that reduces or “buys back” a percentage deductible to a smaller amount for an extra premium. Availability and pricing vary by insurer.
Why lenders care on Nantucket
Lenders want to protect the house that secures the loan. Large deductibles can delay repairs, which puts collateral at risk. Your lender may ask for proof of insurance, the deductible amount, and evidence that you can cover it.
Expect your lender to review your policy, confirm deductible levels, and decide whether they require additional reserves. In some cases, a lender may ask you to pre-fund a deductible deposit at closing. They also manage an escrow for premiums and can adjust your monthly escrow if premiums change after renewal.
Condo buyers and HOA deductibles
Condominium master policies on the coast often carry large named-storm deductibles. If the association needs to meet a big deductible after a storm, they may assess unit owners for their share. Lenders usually review the condo’s master insurance, deductible level, and reserves.
Before you commit, request the master policy declarations page and recent HOA financials. Ask whether there is a plan or reserve for the master deductible. This helps you avoid surprises and keeps your loan approval on track.
Planning steps before you close
Follow this checklist to reduce friction and protect your budget.
- Early verification
- Request the current policy declarations page and endorsements from the seller or your chosen insurer.
- Confirm the deductible type, percentage or dollar amount, and whether a named-storm deductible applies.
- For condos, get the master policy dec page plus the HOA budget and reserve details.
- Work with the insurer and agent
- Confirm how the deductible is calculated and what triggers it.
- Ask for quotes on alternative options, including lower percentages or a deductible buyback endorsement.
- If shopping carriers, get written confirmation of the deductible structure and triggers.
- Ask the lender early
- Provide the declarations page for review.
- Ask if the deductible level is acceptable or if reserves, escrow, or pre-funding will be required.
- For condos, confirm whether the HOA deductible or reserves create approval issues.
- Prepare cash reserves
- Calculate your potential out-of-pocket cost. For a percentage deductible, multiply Coverage A by the percentage.
- Keep that amount in liquid savings. This supports lender comfort and speeds repairs after a storm.
- Consider coverage alternatives
- Evaluate buyback endorsements and their premium cost versus your risk tolerance.
- Review stand-alone wind or hurricane options, if offered, and the combined cost and coverage.
- Remember that flood is separate. Wind damage is not flood damage.
- Closing logistics
- Ensure your binder matches the contract: coverage limits, effective dates, and mortgagee clause.
- Confirm whether the lender requires an escrow and the initial escrow deposit amount at closing.
Flood vs wind on the island
Flood policies handle rising water that enters the home from outside. Standard homeowners and wind policies cover wind damage, not flood. Many Nantucket properties need both types to be fully protected.
If your home is in a flood zone, plan for a separate flood policy. This avoids coverage gaps and aligns with most lender requirements in higher-risk areas.
Budgeting your deductible
Your deductible should be a line item in your ownership budget. Here is a simple way to plan:
- Confirm Coverage A and the deductible percentage.
- Calculate the cash requirement and keep it liquid.
- Compare premiums for lower deductibles or buyback endorsements.
- If lender requirements change the policy or escrow, adjust your cash plan before signing.
After a storm on an island
Nantucket’s island logistics can extend timelines. Access can be limited, contractors can be backlogged, and repair costs can rise. Having cash on hand to cover your deductible helps you start work quickly and keep your property in top condition.
The bottom line
Wind and named-storm deductibles are a normal part of owning on Nantucket. The key is to understand how your policy calculates them, confirm what your lender requires, and set aside the right reserves. With early planning, you can close smoothly and be ready for the next storm season.
Ready to assess your options or price your property with insurance in mind? Get tailored guidance and a fast read on market value. Unknown Company can help you plan, compare scenarios, and align your coverage with your goals.
FAQs
What is a wind deductible on Nantucket?
- A wind deductible is the amount you pay out of pocket for wind damage, often set as a percentage of your dwelling coverage, and it may differ from your standard deductible.
How much might I pay after a hurricane?
- With a 2% named-storm deductible on a $1,000,000 Coverage A limit, your out-of-pocket deductible would be $20,000, plus any uncovered losses.
Can I lower my named-storm deductible?
- You may be able to pay a higher premium for a lower deductible or add a deductible buyback endorsement if your carrier offers it.
Will my lender require escrow for the deductible?
- Not usually by default, but lenders may ask for proof of reserves, pre-funding, or escrow if they judge the deductible to be a higher risk.
Does flood insurance cover wind damage?
- No, flood policies cover flooding while wind damage is handled by homeowners or wind policies, so many coastal owners carry both.
What should condo buyers review for deductibles?
- Review the condo master policy deductible, HOA reserves, and any plan to fund the deductible, since large named-storm deductibles can lead to special assessments.
