What is a deductible?
A deductible is an amount the insurance company subtracts from your payment for damages caused by a covered loss. It is the amount you will be expected to pay if you repair or replace damaged property.
You can find your deductible amounts on your policy’s declarations page (often called a dec page). The dec page summarizes your policy and coverages, limits and deductibles, and the dates your policy is effective. You should get a dec page each renewal period.
It is important to know what type of deductibles you have, how much they are, and understand how they apply.
What are the different types of deductibles?
Most residential policies will have a deductible that is either a flat amount or percentage deductible:
- A Flat Amount Deductible is a fixed dollar amount. For example: $1,000.
- A Percentage Deductible is based on the percentage of your home or condo’s insured value. The percentage is calculated on the amount of insurance you have on your home, NOT the amount of your claim.
Percentage Deductible Example:
Your home is insured for $200,000. You have replacement cost coverage. A hailstorm does $7,000 worth of damage to your home.
- With a 1% deductible, you pay $2,000 of the claim and the company pays $5,000.
- With a 3% deductible, you pay $6,000 of the claim and the company pays $1,000.
- With a 5% deductible, you pay the full $7,000 of the claim, because your deductible is higher than the amount of the claim, and the company pays $0.
Are there special deductibles for storms?
For certain causes of loss, special higher deductibles may apply, including:
- Hurricane Deductible – A hurricane deductible typically applies to damage from storms categorized as hurricanes by the National Hurricane Center/National Weather Service.
- Named Storm Deductible – A named storm deductible is typically triggered when the National Weather Service officially names a storm. This usually includes tropical storms and hurricanes.
- Wind/Hail Deductible – A wind/hail deductible the broadest and typically applies to any kind of damage from a wind or hail event.
Most deductibles apply on a per claim basis, but it is possible for example, that a named storm deductible may only apply once a season rather than each storm. The specifics can differ, so be sure to look at your policy and ask questions to determine your needs while shopping for insurance or making changes to your policy.
Other things to know about deductibles:
- There could be several deductibles that apply to your claim. Typically, only the largest deductible will apply. Read your policy or talk to your agent to learn how your deductibles apply. Visit our Claims Handling page to learn more about the claims process.
- For renters with a percentage deductible, your deductible amount is based on the amount of insurance you have on your contents, NOT the amount of your claim.
- Beware of contractors offering to waive the deductible. Your deductible is part of your insurance agreement. It is illegal for contractors to offer to waive the deductible without your insurer’s consent. Check out our other tips to avoid contractor fraud.
- Your insurance company may require proof that you paid the amount of your deductible to a contractor before they give any additional payments of replacement cost benefits.