Every property insurance policy contains a deductible–the amount of money you, the policyholder, is responsible for before your insurance carrier begins to pay for a covered loss. Understanding your deductible is the first step in successful risk management planning. You cannot accurately assess your financial vulnerability after a storm, fire, or other peril until you know exactly how much you’re responsible for paying out of pocket before the insurance company steps in.
Homeowners typically encounter one of two primary types of deductibles, and knowing which applies to your policy is important. Always review your policy declarations page to determine which deductible applies to which peril.
A common misconception is that the deductible must be paid upfront to the insurance company before repairs can begin. This is rarely the case. The deductible is typically paid when the insurance company subtracts it from the final claim settlement. For instance, if your documented claim total is $25,000 and your fixed deductible is $5,000, the insurance carrier will issue a payment of $20,000.
The deductible affects both the Actual Cash Value (ACV) payment and the Replacement Cost Value (RCV) payment.
When a claim is paid, the carrier first calculates the ACV—the replacement cost minus depreciation—and then subtracts the deductible from that ACV amount. If the initial ACV payment is lower than your deductible, the insurer will send a $0 check. Our role as Public Adjusters is to verify the estimated loss value exceeds your deductible to guarantee a paid claim.
Percentage deductibles are designed to significantly limit the insurance carrier's exposure to catastrophic risk. When faced with a 3% or 5% deductible on a $750,000 home, the policyholder's responsibility jumps to $22,500 or $37,500, respectively. This can easily turn a substantial storm repair into an entirely out-of-pocket expense. If your policy uses a percentage deductible, make sure you’re aware of the potential liability.
A professional Public Adjuster can make sure that property owners are properly indemnified for loss, and that a fair and honest settlement is provided. We conduct a thorough inspection and produce a detailed, line-by-line loss estimate that often uncovers hidden damages (like code compliance issues or non-obvious smoke damage) overlooked by the insurance carrier’s adjuster. This verifies the total claim value is maximized according to your policy, and that the settlement payment clears, and ideally far surpasses, your out-of-pocket deductible.
Protect your deductible and your investment–contact Tiger Adjusters®.
