An Explanation of Deductibles on a Home Insurance Claim

Insurance policies in the United States can have more than one deductible. Some policies have a standard across the board deductible, which may be a set amount or a percentage of the dwelling coverage. There may also be other deductibles, such as a cyclone deductible or a wind and hail deductible. If the policy includes a water or sewer backup endorsement it will likely have a separate deductible as well.

While insured in some areas of the country are fortunate to even have coverage for cyclones, known as hurricanes in the western hemisphere, the deductible can bite in the event of a loss. It’s probably going to be several percentage points of the overall dwelling coverage. The pain comes if you have a minor loss to your property due to cyclone, because any payment from insurance is going to be devoured by the deductible. On the positive side, you did not have major damage.

Coverage for hurricanes under a policy with a cyclone deductible is usually only helpful if you have very significant damage.

Some insurance company policies in areas prone to hurricanes may have as much as a 10 to 15% cyclone deductible. It causes one to wonder if one day hurricane coverage will go the way of flood coverage, and be completely dropped from home insurance policies and perhaps like flood coverage have to be underwritten by the federal government.

Some policies have a separate deductible for wind and hail damage. This type of deductible is not common since a great majority of storm claims involve wind or hail or both.

In my experience the average policy deductible is $1,000, with some insured having lower deductibles, especially those who have had their policy for decades or longer. There are policies with higher deductibles, a percentage of the dwelling coverage amounting to several thousand dollars in some cases.

The lowest deductible I have seen was $50.00. The customer had her policy for over 50 years. She was not happy she had to come out of pocket 50 bucks, after being a customer for so long.

As much as we value your commitment to us for over a half a century, I explained – and that gratitude cannot be measured in dollars – everyone has to chip in their deductible.

When I told her the deductible of the insured I would be calling after her there was a long silence. I never heard another peep about her deductible.

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