Named storm deductibles on apartment buildings: what your lender allows

A named storm deductible is a percentage of your insured value. On an apartment building, that percentage gets big fast.

Say the property is insured for $10 million. At 5%, you pay the first $500,000 of storm damage yourself. At 7.5%, you pay $750,000.

Your carrier picks the percentage. Your lender sets the cap. And when the two don't match, your closing can stall.

How a named storm deductible works

When a storm named by the National Hurricane Center damages your property, the named storm deductible applies. On most policies it replaces your regular deductible for that loss.

It sits on your multifamily property insurance policy, and carriers write it as a percentage of insured value. The agency guides call that number total insurable value, and it includes the rent your building earns.

Wind and hail can carry their own percentage deductible too. That one covers storms without a name, so it can show up on inland properties.

What lenders allow

Agency lenders cap both numbers. Here's what each one has published:

• Fannie Mae and Freddie Mac: up to 7.5% of total insurable value for named storm and up to 5% for wind and hail, per Fannie Mae's guide (effective September 28, 2026) and Freddie Mac's July 2025 bulletin. Fannie Mae caps a flat dollar deductible at $50,000, or $100,000 on properties insured for $10 million or more.

• HUD (FHA-insured loans): the greater of $50,000 or 5% of insurable value per location, up to $475,000 per occurrence. HUD raised that cap in April 2024.
  

These are caps, and your loan documents can be tighter. So read yours before you bind a policy. If you'd like a second set of eyes, that's what our lender compliance work covers.

Fannie Mae adds one more rule. If your main policy excludes named storms and the property sits in a Tier 1 named storm county, you need a separate named storm policy for at least 90% of total insurable value. Your carrier decides which counties count as Tier 1, and coastal ones probably do.

When the carrier's deductible is higher than the cap

Sometimes the best quote on the table carries a deductible above your lender's cap. You have 2 ways out.

The first is a different carrier. Deductible terms vary between markets, so a second quote can change the picture.

The second is deductible buy-back coverage, which pays the slice of the deductible that sits above the cap. Whether your lender accepts it is a question for your lender, so ask before you buy.

What this looks like on a coastal deal

We worked with the owner of a 136-unit property in Wilmington, NC. Coastal wind and named storm coverage can be hard to place, and this lender's requirements were strict.

We went to specialty markets and built the policy around the lender's terms. The property met the requirements, and the annual premium stayed reasonable going into hurricane season.

4 questions to ask before you bind

1. Does the percentage apply to the whole property or to each building? On a property with several buildings, the answer can change your out-of-pocket cost a lot.

2. What counts as a named storm? Policies define it differently, so read that definition and the time window around it.

3. Does the policy cover storm surge? If it leaves surge out, you may need separate flood coverage (Fannie Mae requires it for buildings in the 500-year flood zone).

4. Does the deductible fit under my lender's cap? Get that answer from your lender before you bind.

Then ask yourself one more thing: could you write the check? Fannie Mae's guide tells lenders to assess whether the borrower can pay the deductible, and I'd take a higher premium over a deductible I couldn't pay.

Storms bring liability claims too

Your property policy handles the building. Injury claims go to your general liability coverage, like when a resident says you should have trimmed that dead oak before the storm.

Check your deductible against your lender's cap

Send me your quote and your loan's insurance requirements through our quote form, and I'll tell you whether the deductible fits. You'll hear back within 24 to 48 hours.

Frequently asked questions

What is a named storm deductible on an apartment building?

A named storm deductible is the amount you pay before insurance pays for damage from a storm named by the National Hurricane Center. Carriers usually write it as a percentage of total insurable value, so the dollar amount grows with the size of the property.

How high can a lender let my named storm deductible go?

Fannie Mae and Freddie Mac allow up to 7.5% of total insurable value. For FHA-insured loans, HUD allows the greater of $50,000 or 5% of insurable value per location, up to $475,000 per occurrence. Your loan documents can set a lower cap, so check them first.

Does a named storm policy cover flood damage?

Storm surge and flood often fall outside a wind policy. When a named storm policy leaves out surge, Fannie Mae requires flood coverage on buildings in the 500-year flood zone, equal to the maximum available through the National Flood Insurance Program or its equivalent.

Can I lower a named storm deductible?

Sometimes. You can ask for a lower percentage (the premium goes up) or price the property with another carrier. If a quote still runs above the cap, deductible buy-back coverage can cover the difference, as long as your lender accepts it.

Stuart Moore is the key agent at Moore Multifamily in Gainesville, Georgia. The firm works only with apartment owners and investors across the Southeast.