Parametric Insurance
Coverage that pays a pre-agreed amount when a measured event, like a set wind speed, hail size, rainfall total or earthquake intensity, meets your trigger. No damage adjustment, and payment usually arrives within days.
What is parametric insurance?
Parametric insurance pays based on a predefined trigger or measured event, not on an adjuster’s estimate of damage.
Paid on the event, not the damage
Traditional insurance pays after a loss is inspected and adjusted. Parametric insurance agrees on the trigger and the payment in advance. When independent, objective data shows the trigger was met, the payment is made under the policy terms.
Not dependent on any other coverage
Parametric stands on its own. It can protect the balance sheet, cover a deductible, replace lost revenue or fund recovery while traditional claims are still being worked out.
How parametric insurance works
Set the trigger
Choose the event and threshold, such as wind speed at your location, hail size, rainfall amount or earthquake intensity, along with the payment amount.
The event is measured
An independent data source records what actually happened at the covered location.
Payment is made
If the measured event meets the trigger, the policy pays the agreed amount, usually within days.
How a tiered trigger can be structured
| Measured wind speed at the property | Payment |
|---|---|
| Below the first threshold | $0 |
| First threshold met | 25% of limit |
| Second threshold met | 50% of limit |
| Top threshold met | 100% of limit |
Hypothetical illustration only. Actual triggers, thresholds, payment amounts and data sources are set in each quote and policy.
Understand the trigger before you buy
If the trigger is not met, there is no payment
A loss can happen without the measured event reaching the trigger. For example, a storm may damage your property while the recorded wind speed stays below the threshold. That gap is called basis risk, and it is the main trade-off for parametric’s speed and simplicity.
How to use parametric well
- Pick triggers that match how your property or business is actually hurt
- Use it for fast cash and financial disruption planning
- Pair it with traditional coverage rather than replacing it
- Consider deductible buy back when the goal is a lower deductible
Who should consider parametric insurance?
A good fit for
- Businesses that could be shut down, or lose revenue, after a disaster
- Commercial property owners and real estate investors
- Homeowners associations (HOAs)
- Property owners who want cash fast after a catastrophe
- Anyone who wants a more predictable financial plan before a major loss
Events that can be covered
- Wind
- Hurricane
- Hail
- Rainfall / flood
- Earthquake
Available in 47 states with limits up to $10,000,000, well above the $25,000 offered by some other programs. Triggers, perils and states vary by program; call to confirm availability for your location.
Parametric insurance vs. deductible buy back
Parametric pays when an event hits a trigger. Deductible buy back (also called deductible buy down) is traditional insurance that lowers the deductible on your existing property policy after a covered loss. We offer both.
| Compare | Deductible Buy Backalso called deductible buy down | Parametric Insuranceevent-triggered coverage | Roof-only trigger programsoffered by some other markets |
|---|---|---|---|
| How it works | Traditional insurance. Pays part of your deductible after a covered loss on your primary policy. | Pays a pre-agreed amount when a measured event (wind speed, hail size, rainfall, quake intensity) meets the trigger. | Parametric-type trigger tied to storm data at the roof. |
| What starts a claim | A covered loss. No wind-speed or hail-size trigger required. | The trigger must be met. A loss without the trigger does not pay. | Qualifying storm-data or event model. |
| Needs another policy? | Yes. It sits alongside your existing (overlying) property policy. | No. Parametric stands on its own. | Varies |
| What it protects | Your property deductible for covered wind, hail, flood, fire or earthquake losses. Not roof-only. | Cash for any use: deductibles, lost revenue, cleanup, business interruption. | Roof damage only |
| Homes | Yes, deductible down to $2,500 | Yes, available by program | Yes |
| Businesses | Yes, deductible down to $5,000 | Yes, available by program | Mostly residential |
| Size / limits | Properties up to $100,000,000 total insured value | Limits up to $10,000,000 in 47 states | Often about $2,000 to $25,000 per structure |
| Claim speed | Follows the normal claims process on your primary policy | Usually paid within days of a qualifying event | Varies |
| Best for | Turning a large, unpredictable deductible into a small, known amount | Fast cash after a catastrophe; protecting revenue and the balance sheet | Small residential roof gaps |
Swipe the table sideways to see every column.
Limits, triggers, perils and state availability vary by program and are confirmed in each quote. Deductible buy back and parametric are separate coverages; you can buy either one or both.
Want a lower deductible instead?
Deductible buy back can lower a large wind, hail, hurricane, flood, fire or earthquake deductible to $2,500 for homes or $5,000 for businesses, with no weather trigger needed.
Using both together
Deductible buy back and parametric are separate coverages. Some owners use buy back to shrink their deductible and parametric for fast cash to keep operating after a major event.
Parametric insurance questions
How does parametric insurance pay?
It pays a pre-agreed amount when an independent measurement, such as wind speed, hail size, rainfall or earthquake intensity, meets the trigger in your policy. There is no traditional damage adjustment, so payment is usually made within days.
What happens if I have damage but the trigger is not met?
Parametric does not pay unless the trigger is met. This is called basis risk. That is why parametric is usually used alongside traditional insurance, not instead of it.
Do I need another insurance policy to buy parametric?
No. Parametric insurance is not dependent on any other coverage.
What can I use a parametric payment for?
Parametric can serve as balance sheet protection. Businesses and property owners commonly use it for deductibles, lost revenue, cleanup, temporary expenses or other costs after a disaster.
How much parametric coverage can I get?
We offer parametric limits up to $10,000,000 in 47 states. Limits, triggers and availability vary by program.
Is parametric insurance the same as deductible buy back?
No. Deductible buy back (deductible buy down) is traditional loss-based insurance that lowers the deductible on your existing property policy after a covered loss. Parametric pays when a measured event meets a trigger, whether or not you have another policy.
Is parametric insurance available in my state?
Our parametric programs are available in 47 states. Call (888) 528-0700 to confirm availability and triggers for your location.
See what a parametric policy could pay
Tell us about your property or business and the events you worry about most. Insurance agents: get appointed to offer parametric.
Coverage is subject to underwriting, policy terms, exclusions and state availability. Parametric insurance and deductible buy back are separate coverage options. Payment depends on the trigger being met as defined in the policy; claim payments are not guaranteed.