A deductible is the amount of money included in an insurance contract that you are responsible for paying when seeking insurance coverage and before the insurance company will start processing your claim. It is the way in which risk is shared between you, the policyholder, and your insurer. In this case, you kind of reimburse yourself for your loss. The amount of money you paid is subtracted, or deducted, from your claim. Moreover, the larger the deductible, the lower the premium for an insurance policy. For example, if your policy stated a $500 deductible and your insurer had estimated your loss to be $10,000, you would pay a $500 deductible before you receive a claim check for $9,500. Percentage deductibles are calculated based on the home’s insured value. So, if your house is insured for $100,000 and your insurance policy has a 2 percent deductible, $2,000 would be deducted from any claim payment. If the adjuster estimated a $10,000 insurance loss, you would be paid $8,000. In the event of a $25,000 loss, you will get a claim reimbursement of $23,000.
How Much Is the Deductible?
As your insurance policy is regulated by the state, you should ask your agent about your own state laws. Your deductible should be stated in the terms and conditions of your contract.
Who Decides How Much the Deductible Will Be?
You, the insured, usually can choose how much of a deductible you will pay. The higher the deductible is, the lower the cost of your insurance will be. As a consequence, the higher the amount of risk you are willing to take by being ready to pay the deductible, the less risk for the insurance company. Therefore, they reduce your premium.
Homeowners Disaster Deductibles.
Wind/hail and hurricanes are covered by standard homeowner’s insurance; flood and earthquake policies should be purchased separately by homeowners. Keep in mind that each of these disasters has its own deductible rules. If you live in an area that's at high risk for one of these natural disasters, it is essential for you to understand your deductible. Check your policy and speak to your insurance agent to learn exactly how your particular policy work. Contact us at (972) 266-6677 to if you would like any further explanation on deductibles. ARR Contractors, an experienced roofing contractor, is always there for you!