What is an Insurance Deductible?
Defining the insurance deductible and how it applies to insurance claims.
Local Insurance Pros
Understanding How Deductibles Work and How a Public Insurance Adjuster Can Help
When you buy insurance, like for your car or house, there’s a special amount of money called a deductible. This is the money you have to pay yourself before your insurance company starts to help pay for something that gets broken or damaged.
What Is a Deductible?
Think of a deductible like your share of a repair or loss. For example, if your deductible is $500 and your car needs $3,000 in repairs after an accident, you pay the first $500. Then, your insurance company pays the rest, which is $2,500. If the damages cost less than your deductible, like $400, you would have to pay all of it since it’s less than the deductible.
Why Do Deductibles Exist?
Deductibles help keep insurance costs down. If you choose a higher deductible, your monthly insurance payments (called premiums) usually become lower. But it also means you will pay more money out of your own pocket when something goes wrong. If you want to pay less money when you have a claim, you can pick a lower deductible—but your insurance premiums will be higher.
How Deductibles Are Applied to Claims
When you make a claim, your deductible is subtracted from the total amount the insurance will pay. So, if the damage to your house or car is $10,000 and your deductible is $1,000, your insurance will only pay $9,000. You must pay that first $1,000.
Some insurance policies, like in Florida, have special rules for deductibles. For example, hurricane damage may have a deductible that is a percentage of your home’s value instead of a fixed dollar amount. This means if your house is worth $200,000 and your deductible is 2%, you will pay the first $4,000 of the claim.
How a Public Insurance Adjuster Can Help
A public insurance adjuster is someone who helps you understand your insurance policy and reviews your deductible and coverage. They know all the complicated rules and can help make sure the insurance company pays the right amount when you file a claim. They can also explain your policy and help you choose the best deductible for your needs. Having an expert review your policy can save you money and reduce stress when you need to make a claim.
Understanding your deductible helps you be prepared and make smart choices with your insurance. Remember, the deductible is the part you pay first, and your insurance helps with the rest. And if you’re ever unsure, a public insurance adjuster can help you figure it all out.