Troy Tiger Explains: Deductible 

Let's break down what a deductible is! Think of your deductible as your personal co-pay for a covered loss. It's the first bit of money that comes out of your, the policyholder’s, pocket when you make a claim before your insurance company steps in to cover the rest.

Here's how it generally works: Let's say you have a homeowner's policy with a $1,000 deductible. If your roof gets damaged in a storm and the repair cost is $10,000, you'd pay the first $1,000, and then your insurance company would pay the remaining $9,000. It's essentially your share of the risk.

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How an Insurance Deductible Works

• Your insured property suffers damage (e.g., car accident, home fire).
• You file a claim with your insurance company for the covered loss.
• An adjuster assesses the damage and determines the total covered repair or replacement cost.
• Before the insurance company pays out, your deductible amount is subtracted from the total covered loss.
• You pay the service provider (e.g., auto body shop, contractor) your deductible amount, and the insurance company pays the remaining balance directly to the provider or reimburses you.

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Does Every Insurance Policy Have a Deductible?

While most property and casualty insurance policies, like auto and homeowner's, have deductibles, there are exceptions. Some policies, or specific coverages within a policy, might not have a deductible. For instance, liability coverage in an auto policy typically doesn't have a deductible, as it covers damages you cause to others. Similarly, certain medical insurance plans might have co-pays or co-insurance instead of a traditional deductible, or even no deductible at all for specific preventative services. However, for anything related to repairing your own property or significant medical procedures, a deductible is almost always a factor.

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Breakdown of Common Deductible Types

• Flat/Per-Claim Deductible: A fixed dollar amount (e.g., $500, $1,000) that applies to each separate claim. 
  
  • Example: You have a $1,000 deductible. If you have two separate incidents of vehicle damage in a year, you pay $1,000 for each.
• Percentage Deductible: Often seen in homeowner's policies, particularly for hurricane or windstorm damage. It's a percentage of the insured value of your home (e.g., 1%, 2%, 5%).
  
  • Example: Your home is insured for $300,000 with a 2% hurricane deductible. If a hurricane causes damage, your deductible would be $300,000x2% = $6,000.
• Aggregate Deductible: Common in commercial policies, this is a total amount that must be met across all claims within a specific policy period (e.g., a year) before the insurer pays. Once the aggregate is met, subsequent claims within that period are paid in full by the insurer.
• Calendar Year Deductible (Health Insurance): A set amount you must pay for covered medical expenses within a calendar year before your health insurance starts paying.

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Are All Deductibles Created Equal?

No, they are definitely not! The type, amount, and how they apply can vary significantly between policies and even within different sections of the same policy. For example, your homeowner's policy might have a standard deductible for fire damage, but a separate, higher percentage deductible specifically for wind or hurricane damage. Auto policies often have separate deductibles for collision versus comprehensive coverage. It's crucial to understand each deductible in your policy, as a higher deductible means less upfront cost in premiums but more out-of-pocket expense if you make a claim. Always compare deductible options with your premium savings to verify it aligns with your financial comfort level and risk tolerance.

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Final Thought:

Your insurance deductible is more than just a number; it's a key factor in your insurance costs and financial readiness for a claim. Understanding your deductible—how it works and its implications—is vital for making informed decisions about your coverage. Don't let confusion about deductibles leave you exposed; review your policy thoroughly and if you're ever unsure about your responsibilities during a claim, especially regarding the deductible, reach out to your Public Adjuster.