What is a deductible?
A deductible is the amount of money you have to pay up front in order for your insurance company to pay you the remaining monies to make the claim whole. When purchasing insurance you are asking the insurance company to "have your back" if you suffer damages that could hurt you financially. For example a weather event. The insurance company usually says, "Sure, I'll cover you if you have a loss (claim), but you will have to agree to pay the first part of it by paying your deductible."
There are two types of deductibles when it comes to a weather event. One deductible is a flat rate while another is a percentage of the property value. For example a flat rate deductible for hail could be $500.00, while a hurricane is a percentage of the property usually two to five percent.
When purchasing insurance your monthly or annual insurance payment is directly correlated with how high or low you set your deductible. So when you set your deductible take into consideration, how much you can afford to pay in insurance payments versus how much you can afford to pay out of pocket if something bad happens.
A high deductible gives you a lower insurance premium, but it could also prove to be too big of a hit to your bank account when it comes time to file a claim. Many of our customers choose to go through their insurance companies after a weather event and file a claim. The customer sometimes unfortunately has a hard time understanding their deductible and how it is paid.
Here at Sun Coast Roofing & Solar we have an insurance department that can help the customer better understand this process. For example, we will use round figures, if the total claim for hail is worth $10,000.00 and the customers deductible is $500.00, then the insurance company is going to send the customer $9,500.00 in checks. In order to make the claim whole the customer has to pay the $500.00 deductible out of pocket.
Now for a hurricane deductible of two percent of the property value of $150K, the deductible will be $3,000. This means $3,000 would be out of pocket for the customer on a hurricane claim.
This can be confusing to the customer because when the insurance company sends out the scope of loss it shows minus the deductible. The customer now thinks they have already paid it and think that when we ask for the deductible payment they think they are paying it twice but really they are only paying it once. The customer is always responsible for their deductible.
I have personally found that the easiest way to explain this process to the customer is to have my scope of loss in front of me highlighted in different colors of what the total claim is, the amounts of checks the insurance company is going to send, and what the deductible is. Showing this to a customer really helps them better understand how the deductible works in coordination with filing a weather claim.
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