A $50,000 per-unit deductible cap just met Oklahoma's percentage hail deductibles
A $50,000 per-unit deductible cap just met Oklahoma's percentage hail deductibles
2026-09-15 · Oklahoma · Compliance
An Oklahoma condominium that renewed its master policy this spring with a percentage wind-and-hail deductible, and did not check the per-unit arithmetic, may be carrying a project-eligibility defect that only surfaces when a unit tries to sell.
Fannie Mae's Selling Guide topic B7-3-03, Master Property Insurance Requirements for Project Developments, as published August 5, 2026, now states two deductible ceilings:1
“The maximum allowable deductible for all required property insurance perils is 5% of the master property insurance coverage amount.”
“The maximum allowable per unit deductible for all required property insurance perils covered by a master property insurance policy is $50,000 per unit.”
Why both matter
The per-unit ceiling is new and it is additional, not a replacement. A policy can satisfy the percentage test comfortably and still fail the per-unit test. The change came through Lender Letter LL-2026-03 and Freddie Mac Bulletin 2026-C, both issued March 18, 2026, with the deductible and unit-owner policy changes reported as effective July 1, 2026.2
The Oklahoma arithmetic
Oklahoma master policies overwhelmingly carry percentage wind and hail deductibles, because that is how carriers have stayed in a severe-hail state at all.
Take a building insured for $10 million with a 2% wind-and-hail deductible. That is $200,000 — well inside the 5% test, which would allow $500,000. Against the per-unit ceiling it is $50,000 per unit only if four units share it. A twenty-unit building is at $10,000 per unit and fine. A three-unit building at the same percentage is at roughly $67,000 per unit and is not. Small projects and high percentages are where this breaks.
How to find out where you stand, in one calculation
Take the wind-and-hail deductible as it would actually apply to a total loss of the insured building. Divide by the number of units in that building. If the answer is more than $50,000, the policy does not meet the current standard.
Do it building by building where the master policy covers several. Percentage deductibles are frequently written per building, and the small building is the one that fails.
What breaks when it fails
Nothing, immediately. Nobody sends a letter. The failure appears at the next conventional purchase or refinance in the project, when a lender runs project review, reads the deductible off the declarations page, and declines. At that point the seller has a buyer who cannot get a loan, and the board has a problem it cannot fix by closing.
The fix is bought at renewal, not discovered at closing. The two available remedies are a per-unit cap endorsement on the wind-and-hail deductible, or a flat-dollar hail deductible instead of a percentage. Both cost premium. Both have to be negotiated with a carrier that is already unenthusiastic about Oklahoma hail.
The roof rule that arrived at the same time, and helps
The same Selling Guide topic now provides: “The master property insurance policy must provide coverage on a replacement cost basis, with the exception of roofs,” and “Roofs must be insured, but do not have to be insured on a replacement cost basis.” The overall coverage amount must still “equal at least 100% of the estimated replacement cost value of the project improvements.”
This matters disproportionately in Oklahoma. Carriers here have spent several renewal cycles moving associations onto actual-cash-value roof schedules and roof-payment endorsements to keep writing the business at all. Until 2026 that trade-off quietly broke agency eligibility. It no longer does.
The cost of that relief has simply moved. An ACV roof means the depreciation gap lands on the members as a special assessment after the next hailstorm. Nothing in the federal layer stops that, and a board taking the ACV roof to hold down premium should be funding the gap in reserves rather than discovering it after the storm.
Two smaller items on the same page
No inflation-guard requirement appears in the current Guide. Secondary sources report it was retired by the March lender letter; what is verifiable is that it is absent from B7-3-03 as published. Either way, annual revaluation of the building is now the board's job and nobody else's.
The HO-6 side is unconfirmed. Reports of a unit-owner deductible cap of “5% of coverage amount or $2,500 maximum” could not be verified against a primary source, and that figure stays unverified until a board's agent confirms it.
What a board can do this autumn
Run the per-unit calculation before the renewal quote, not after. It takes five minutes and it determines what you are asking the broker to go get.
Ask for the per-unit cap endorsement in writing, and price both options. A flat hail deductible and a capped percentage are different products with different premium consequences.
Tell the owners what a percentage deductible means for them. In most Oklahoma declarations, the master-policy deductible is allocated to unit owners in some form. An owner who does not know the number cannot carry the matching HO-6.
If the deductible cannot be brought under the cap, say so to the membership before someone lists a unit. A known eligibility problem is a board decision. An unknown one is a failed closing.
What to watch next
The reserve rule that follows it: the replacement-reserve minimum rises from 10% to 15% of budgeted assessment income for loan applications dated on or after January 4, 2027 — which means the budget an Oklahoma board adopts this autumn for calendar 2027 is the one that has to carry it.
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