Call Us CALL US TODAY | 352.332.0180
Auto Insurance PERSONAL AUTO
Auto Insurance COMMERCIAL AUTO
Homeowners Insurance HOME
Business Insurance BUSINESS
Toy Insurance TOYS
Contractors Insurance CONTRACTORS

Understanding the Basics of Insurance Deductibles

To get the most out of a car or home insurance policy, it is important to understand the roles deductibles play. A deductible is the amount deducted from an insured loss. When a damage claim is filed, the deductible is the amount of money a policyholder must pay upfront. It may be a percentage of the policy's total or a set dollar amount. Larger deductibles are associated with smaller premiums. To find the verbiage concerning deductibles, consult the front page of the auto or homeowners policy. Deductibles are subtracted from the claim amount. For example, if a person with a $500 deductible files a claim for $10,000, that policyholder will receive a check for $9,500. However, if that individual's deductible is calculated using percentages, the amount may differ. With percentages, the variable is calculated from the total claim and then subtracted from the total.

In many areas of the United States, deductibles are increasing. This is especially true in states prone to hurricanes. Property damage deductibles work differently than those for other types of insurance. For example, a deductible applies each time a claim is filed for auto or homeowners insurance. However, a deductible applies only once each year for health insurance. There are some exceptions for damage-related insurance products. In some cases, hurricane coverage has a per-season deductible. The following points cover some of the most important deductible information.

Deductibles Do Not Apply To Liability Claims

While there is no deductible for a liability claim with a homeowners or auto policy, there is a deductible for property damage. Deductibles apply to claims made to the comprehensive policy. In homeowners insurance, deductibles also apply to damaged items inside the insured structure. However, they do not apply if a homeowner is sued or if a medical claim is filed by an injured visitor.

Higher Deductibles May Save Money

One of the easiest ways to cut expenses is to raise deductibles for homeowners and auto insurance policies. Increasing an auto insurance deductible from $200 to $500 reduces collision and comprehensive premium costs up to 30 percent. Raising the deductible to $1,000 may result in a savings of more than 40 percent. Remember this is the out-of-pocket amount that must be paid regardless of the amount of the claim.

Flood Insurance Deductibles Vary

Since flooding is not covered in standard homeowners policies, it is sold by the NFIP and private insurance companies. There are several different choices of deductible amounts for these policies. Keep in mind that some mortgage companies require homeowners to keep their deductibles under a specific dollar amount. Flood coverage for vehicles can be obtained with an optional comprehensive plan.

Various States & Companies Affect Deductible Amounts

Insurance is a state-regulated product, and insurers are required to follow their state's rules. The laws affect how deductibles are worded in policies and how they are implemented. Since there are a wide range of deductibles found in each state, it is best to compare policies. Keep in mind that doubling the deductible may save more than 20 percent on the cost of a policy.

Percentage Deductibles Apply To Hurricanes, Hail & Earthquakes

Earthquake deductibles may be much less than 10 percent or as high as 20 percent of the structure's replacement value. Insurance rates are higher in states such as Nevada, Utah and Washington. Consumers in these states may choose higher deductibles to save money. There are special earthquake policies for California residents. To learn more about areas prone to earthquakes, discuss them with an agent.

There are two separate types of wind damage deductibles. The first is a hurricane deductible, which applies to wind damage sustained from hurricanes. The second type is a windstorm deductible, which applies to damages sustained from any other type of windstorm. Hurricane deductibles depend on specific triggers. These are usually designated by the National Weather Service, individual states and insurers. The triggers apply when a storm is officially deemed a tropical storm or hurricane. To learn more about how these triggers work, discuss them with an agent. Some states allow set deductibles. However, communities in high-risk coastal areas may have mandatory percentage deductibles. 

It is always best to contact an insurance agent to discuss what deductible options are best for your specific needs.

Share |


No Comments


Post a Comment
Name
Required
E-Mail
Required (Not Displayed)
Comment
Required


All comments are moderated and stripped of HTML.
Submission Validation
Required
CAPTCHA
Change the CAPTCHA codeSpeak the CAPTCHA code
 
Enter the Validation Code from above.
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive


View Mobile Version
Facebook
Twitter
LinkedIn
Carriers
Carriers
Carriers
Carriers
Carriers
Carriers
Carriers
© Copyright. All rights reserved.
Powered by Insurance Website Builder