How Do You Build a Named-Storm Strategy for Larger Texas Properties?

What Is the Difference Between Named-Storm, Wind and Hail, and Flood Coverage?

Wind and hail, named-storm and flood coverage answer three different questions, and one hurricane can raise all three. Wind and hail coverage pays for damage from wind and hail. A named-storm provision changes the deductible, and sometimes the limit, when the damage comes from a named tropical storm or hurricane. Flood, including storm surge, is a separate peril that most property policies exclude.

Storm surge is the water a storm pushes ashore above the normal tide, as the National Hurricane Center describes it. FEMA's wind and floodwater fact sheet (March 2023) says a flood policy covers water entering from the ground up, including storm surge. Rain blown in by wind, or water coming through a wind-damaged roof, is treated as wind damage instead.

For larger and multi-location properties, the real question is how these pieces stack across every building on your statement of values (SOV). The SOV is the schedule of each building's values that underwriters price from. Our statement of values guide covers what it should include. The rest of this guide walks through that stack, from TWIA to lender caps.

Where Does TWIA Fit for a Larger Coastal Property?

Where TWIA is used, it can be one part of the wind program, not the whole answer. The Texas Windstorm Insurance Association (TWIA) sells wind and hail coverage on the coast when private insurers decline. Its maximum is small next to the value of many larger buildings.

TWIA's maximum for a commercial structure and its contents combined is $4,424,000. TWIA asked to raise it to $4,563,000 for 2027. The Texas Commissioner of Insurance disapproved that increase in Order No. 2026-10171, dated October 1, 2026. So the limit stays at $4,424,000 for commercial policies delivered, issued or renewed on or after January 1, 2027. TWIA reviews its limits each year, so confirm the current figure at renewal.

TWIA's catastrophe area covers the 14 first-tier coastal counties, including Galveston, Brazoria, Chambers and Nueces. In Harris County, it covers only the area east of Highway 146 inside the city limits of La Porte, Morgan's Point, Pasadena, Seabrook and Shoreacres (TWIA). To be eligible for TWIA, commercial buildings generally also need a windstorm certificate of compliance for work done on or after January 1, 1988.

• Deductibles. TWIA's rating rules (effective February 13, 2024) offer commercial deductibles of 1%, 2% or 5% per item, per occurrence, with a $1,000 minimum. Each separately rated item, such as a building and its contents, has its own deductible.
• Coinsurance. TWIA commercial policies generally carry an 80% or 100% coinsurance clause. TWIA's rules allow it to be waived in some cases, such as when the value is more than TWIA's maximum. Ask how yours is written.
• Lender minimums. Freddie Mac's guide, for example, says that when wind is available only from a state windpool, that policy must be written for at least 100% of total insurable value (Freddie Mac). When a building is worth more than TWIA's cap, expect the lender to ask how the rest is insured.

Our TWIA guide covers eligibility, declinations, windstorm certificates and TWIA's own claim deadlines in more detail.

What Wind Coverage Options Sit Above or Instead of TWIA?

Four structures are common above or instead of TWIA: excess wind, a private all-risk policy with named storm included, difference in conditions (DIC) and shared and layered programs. None fits every property. Which ones you can get depends on location, construction, roof, loss history and the market that year. Availability varies, so treat this as a map of options rather than a menu.

Texas law allows an eligible surplus lines insurer to write wind and hail in TWIA's area. Insurance Code §981.004(f) says TWIA's availability does not prevent it. Some of the structures below are placed in the surplus lines market.

Some owners also add a deductible buy-down, a separate policy that pays part of a large wind or named-storm deductible. HUD noted in its 2024 Mortgagee Letter that buy-down coverage is not always available and adds cost.

Named-storm limits and sublimits are sometimes discussed using a probable maximum loss (PML) study. A PML study is a computer-modeled estimate of the largest loss a storm is likely to cause. Lenders may limit how far you lean on it: Fannie Mae's guide says the valuation for named-storm coverage must not rely solely on PML calculations (Fannie Mae).

How Is a Percentage Named-Storm Deductible Calculated?

It is usually a percentage of insured value, not of the loss. What changes the dollars is which value the percentage uses and how often it applies. The same 5% can mean very different amounts under different wording.

• Per building or per item. The percentage applies to each building's value, and sometimes separately to its contents and income. TWIA works this way, per item.
• Per location. The percentage applies to the combined value of everything at one address.
• Across the schedule. Some programs apply the percentage to the values of all damaged locations, or to the whole SOV, once per storm.
• Minimums and maximums. Many policies set a dollar minimum, and you pay the larger amount. Some also cap the deductible per occurrence.
• Which values count. Check whether business income or rental value is in the base. Fannie Mae's definition of total insurable value, for example, includes property-related business income (Fannie Mae).
• Which date's values. Policies differ on whether they use the values reported on your SOV or the values at the time of loss. Read the definition in your named-storm endorsement.

Two more details matter for portfolios. Each policy defines its storm window, meaning the hours or days when the named-storm deductible applies. Some programs also offer an annual aggregate deductible that caps what you pay across several storms in a year. Fannie Mae's guide, for example, accepts aggregate deductibles only if the amount is fully funded and held in a segregated account, an escrow or by a third party (Fannie Mae). Our deductibles guide has more on storm windows.

What Named-Storm Deductibles Do Fannie Mae, Freddie Mac and HUD Allow?

Fannie Mae and Freddie Mac cap named-storm deductibles at 7.5% of total insurable value, and HUD at the greater of $50,000 or 5% per location, up to $475,000 per occurrence. Each measures its cap differently. The table summarizes the published rules as we checked them in October 2026. Your loan documents control, and a lender may set a lower cap.

Notice how the base changes. Fannie Mae and Freddie Mac measure against the property's total insurable value. HUD measures per location and adds a hard dollar ceiling. On a large HUD-insured property, that ceiling usually decides: 5% of a $20,000,000 location is $1,000,000, well above $475,000.

For a portfolio on one blanket program, each lender reviews the deductible that would apply to its own property. Ask your agent to turn a portfolio-wide percentage into dollars for each loan before closing or renewal. Our agency lender requirements glossary entry has more background.

What Do CMBS and Bank Loans Usually Require?

There is no single published standard. CMBS loan terms are set loan by loan in the loan agreement, and a servicer enforces them for the life of the loan. Bank and life-company loans set their own terms too.

CMBS offering documents filed with the SEC, such as this March 2026 prospectus, list the insurance representations for each loan and any exceptions. Wind and named-storm terms near the Gulf coast differ from loan to loan, so your loan agreement controls.

• Get the insurance section of each loan agreement before you design the program.
• Turn every named-storm and wind deductible into dollars per property and compare it with the cap.
• Check whether the lender wants wind limits equal to replacement cost, the loan amount or a PML-based amount.
• Ask for any exception in writing before closing. In CMBS loans, later changes can be slow.

Our lender requirements guide covers mortgagee clauses, evidence of insurance and force-placed coverage.

How Do Flood and Storm Surge Fit Into the Plan?

Flood is its own layer, and near the water it is often the larger storm exposure. Standard property policies exclude flood, and wind policies, including TWIA, generally don't cover storm surge. So a named-storm plan needs a flood plan beside it.

• NFIP limits. Through the National Flood Insurance Program (NFIP), a non-residential building can get up to $500,000 of building coverage and $500,000 of contents coverage. Apartment buildings with five or more units can get $500,000 for the building and $100,000 for contents (FEMA; FEMA bulletin W-13070).
• One building per policy. Each NFIP policy covers one building, so a multi-building property usually needs several policies.
• How NFIP pays. FEMA's commercial summary says the General Property Form pays actual cash value for buildings and contents, and excludes business interruption.
• Waiting period. NFIP policies usually take 30 days to start. One exception is coverage bought when a loan is made, increased, extended or renewed (FloodSmart).
• Above NFIP. Excess flood can sit above NFIP limits, and private flood can replace NFIP as the first layer. Some larger programs include flood as a sublimit. Availability varies.
• Lender rules. Federal law requires flood insurance on loans from regulated lenders for buildings in a high-risk flood zone. Fannie Mae and Freddie Mac go further: if the named-storm policy doesn't cover storm-surge flooding, buildings in the 500-year flood zone need flood coverage at the NFIP maximum or its equivalent.

TWIA has its own flood rule. If any part of a property is in a V zone, and the structure was built, altered, remodeled or enlarged after September 1, 2009, TWIA requires flood coverage where NFIP coverage is available (TWIA). Our commercial flood guide covers flood in more depth.

Is Houston Coastal or Inland for Named-Storm Purposes?

Mostly inland for TWIA, but not free of named-storm risk. Only the part of Harris County east of Highway 146 inside five cities is in TWIA's area. The rest of Houston gets wind coverage from private insurers, and a private policy can still carry a named-storm deductible there. Insurers draw their own coastal tiers: Fannie Mae and Freddie Mac both refer to Tier 1 counties "as defined by the insurer."

Recent storms show why inland owners plan for named storms too. Hurricane Beryl made landfall near Matagorda on July 8, 2024, and its center passed over the western side of the Houston area. The National Hurricane Center's report says hurricane-force gusts reached inland across and north of Houston. It cites media reports that about 2.7 million people in southeastern Texas lost power.

Flood is the other inland lesson. During Hurricane Harvey in 2017, 36 to 48 inches of rain fell in the Houston metro area, and Harris and Galveston counties saw catastrophic flooding (National Hurricane Center). Rising water is flood, so a wind or named-storm provision generally doesn't pay for it.

How Do You Prepare and Document Before a Storm?

Preparation is loss control, and documentation is claim support. Most of the work belongs before June 1, when the Atlantic hurricane season starts. The National Hurricane Center lists the season as June 1 to November 30.

1. Update the SOV for every building: replacement cost, construction, roof type and age, and business income or rents.
2. Confirm each building's wind source, limit and deductible in dollars, and which deductible applies in a named storm.
3. In TWIA's area, collect windstorm certificates for every building, roof and addition done on or after January 1, 1988.
4. Take dated photos and video of roofs, windows, equipment and interiors. Store copies off-site.
5. Write a storm plan: who secures openings, moves vehicles and stock, shuts down systems and checks the site afterward.
6. Keep a contact sheet for your agent, each insurer's claim line and your loan servicer, with every policy number. TDI's hurricane season tips suggest keeping copies of declarations pages and emailing them to yourself.
7. Set aside or line up funds for the named-storm deductible across all your exposed properties.
8. Confirm flood policies are in force well before a storm forms, since most new NFIP policies have a 30-day wait.

After a storm, report each claim quickly and protect the property from more damage. Your policy's duties after loss and preservation of property terms explain what is expected. For flood claims, FEMA's fact sheet suggests separating damaged from undamaged property and photographing items before you discard them. It notes that tarping is usually allowed, but repairs should wait for the adjuster's visit.

Expect separate wind and flood adjusters. Give each the same dated photos so they can sort wind damage from water damage.

How Do You Build the Strategy at Renewal?

Start early and lead with data. Underwriters price named-storm risk from your underwriting submission, and coastal capacity can take time to arrange. A clean SOV and clear lender requirements make the conversation faster.

1. Gather every loan's insurance requirements and list each named-storm, wind and flood cap.
2. Refresh the SOV, including roof covering, roof age, opening protection and elevation where you have them.
3. Ask for modeled results by location, if available, to see which buildings drive the named-storm cost.
4. Look at each structure on the same basis: limit per occurrence, deductible in dollars, flood treatment and lender fit.
5. Test deductible options against the cash you could actually reach after a storm, not only the premium difference.
6. Decide whether you need a buy-down, an aggregate deductible or a lender exception, and get exceptions in writing.
7. Write down why the limits, sublimits and deductibles were chosen, and who approved them.

Market conditions have helped some renewals. The Council of Insurance Agents & Brokers reported that commercial property premiums fell 5.5% in Q1 2026 and 6.3% in Q2 2026 (Insurance Journal). Underwriters can still be selective about coastal and habitational property, so ask how your renewal compares with current market conditions.

For more on running several properties as one program, see our portfolio guide. If you'd like a second look at your named-storm structure, contact us.

Questions Owners Ask

Sources

1. Texas Commissioner of Insurance Order No. 2026-10171 (October 1, 2026) — TWIA maximum liability limits for policies on or after January 1, 2027; commercial stays at $4,424,000
2. TWIA: Where is the coverage area/designated catastrophe area?
3. TWIA Rating Rules (effective February 13, 2024) — Commercial deductibles 1%, 2% or 5% per item, per occurrence, $1,000 minimum; coinsurance and waiver rules
4. Texas Insurance Code §981.004 — Subsection (f): TWIA availability does not preclude eligible surplus lines wind and hail coverage
5. Fannie Mae Multifamily Selling and Servicing Guide: Property and Liability Insurance — §501.02B deductibles, §501.02C aggregate deductibles, §502.02 named storm insurance (as published October 26, 2026)
6. Freddie Mac Multifamily Seller/Servicer Guide, Chapter 31: Insurance Requirements — §31.7 windstorm insurance (Guide Bulletin update October 20, 2026)
7. HUD Mortgagee Letter 2024-05: Wind or Named Storm Insurance Coverage, Maximum Insurance Deductibles — April 17, 2024; same text as Notice H 2024-6; amends MAP Guide §3.9.2.4.A.3
8. SEC EDGAR: Series 2026-5C14 CMBS trust prospectus (Form 424B2, March 2026) — Annex E-1A windstorm representation and insurance exceptions; one example of CMBS terms
9. FEMA fact sheet: Wind Damage Versus Floodwater Damage (March 2023)
10. FEMA NFIP Summary of Coverage: Commercial Property — $500,000 building and contents; one building per policy; actual cash value; business interruption excluded
11. National Hurricane Center: Tropical Cyclone Report, Hurricane Beryl (May 1, 2025)
12. National Hurricane Center: Tropical Cyclone Report, Hurricane Harvey (May 9, 2018)