Habitational property — apartments, condominiums, and multifamily housing — carries concentrated value and occupancy, and in coastal wind zones it usually carries a large percentage named-storm deductible to match. For owners and operators, that deductible is one of the biggest single retentions on the balance sheet.
Why habitational owners buy it down
A percentage wind deductible on a habitational asset can reach well into six or seven figures on a single covered event, and it applies per storm. Lenders financing habitational portfolios frequently cap acceptable deductibles, which can make a buy-down a condition of the loan. Because the coverage follows form to the overlying property policy on a difference-in-conditions basis, it reduces the retained deductible to a chosen attachment point without disturbing the primary placement. Terms depend on the property and the overlying policy, and are governed solely by the terms of the issued policy.
For how the mechanics work, see the complete guide; to size the exposure, use the calculator.