WHAT IS A DEDUCTIBLE? HOW DOES IT WORK?

March 12, 2019 | Blog

When your home has been damaged in a disaster one of the questions you may ask yourself is ‘How much is this going to cost me?’  If you have planned accordingly and have a good homeowners policy in place then you should be in good shape for proper compensation without too much hassle.

WHAT IS A DEDUCTIBLE?  WHERE CAN I FIND WHAT MY DEDUCTIBLE IS?

  • A deductible is the amount of money you will pay out-of-pocket toward damages or a loss before your insurance company will pay for a claim.
  • Deductibles are typically dollar or percentage amounts.  The amount you choose is locked in with the terms of your coverage when purchased.  Your deductible can typically be found on the front page or declarations page of your insurance policy.

HOW DO DEDUCTIBLES WORK?

  • For dollar amount deductibles the amount you pay comes out of the claim payment. For example, if you pay a $500 deductible and your claim is for $5,000, you would receive a claim check for $4,500.
  • Percentage deductibles are based off a percentage of your homes insured value. For example, if your home is insured for $200,000 and you have a 1% deductible, $2,000 would be deducted from your claim payment.  If your claim was for $10,000 your coverage amount would be $8,000.
  • Deductibles apply each time you file a claim. (Exceptions in Florida)

WHO DO I PAY MY DEDUCTIBLE TO?

  • Deductible costs are often referred to as out-of-pocket expenses. This is because it is money you agree to pay before the insurance company will pay for any damages.  If the damage is less than your deductible, you will pay for all those costs.  For example, if you have a $1,000 deductible and the damage costs were $800, you would have to cover all costs of repairs.
  • If you have an immediate need or emergency (for instance a pipe bursts and floods your home) you will want to call an emergency mitigation service like Pro Response right away. They will come in and help you get started with the insurance claim process while initiating the initial clean-up and assessment of damage.  If your insurance covers these services, the company you are using will be paid through your insurance within the claims process.  In this case, your deductible may not be in play until later when an adjuster has had time to come in and a contractor has been set up with estimates on the cost of your project.  This waiting period is an important time to make sure you have your deductible funds ready so that you can pay your portion of the bill (or deductible) when it does come due.
  • If you are covering all damages on your own, then you will be responsible for paying any contractors or services rendered.

Don’t wait for a disaster to strike before you know what your deductible is and what costs for damage to your home may be.  Be prepared, be knowledgeable about your policy, and be sure you have the proper coverage in place so that there are less surprises and devastating costs after damage to your home.

 

 

Additional Resources & References:

https://www.uphelp.org/pubs/faqs-about-property-damage-insurance-claims

https://www.obrella.com/insurance-faq/how-do-insurance-claims-work/

https://www.iii.org/article/settling-insurance-claims-after-a-disaster

https://www.iii.org/article/understanding-the-insurance-claims-payment-process

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