If you have insurance, you have deductibles – it’s a key feature of most types of insurance. Do you know the benefits of having a high or low deductible, or the financial effect your homeowner’s deductible will have on you in case of an emergency? Let’s dive a little deeper.
Important Deductible Considerations
A deductible is the amount of money you must pay out-of-pocket before your insurance covers it’s share of the expenses after a covered loss. You might consider your homeowner’s deductible the minimum amount of damages you must sustain before you’ll be entitled to payment from your insurance company after making a claim.
Here are some important considerations when it comes to deductibles:
• Do you know what your homeowner’s deductible is? It can be found on the declarations page of your policy.
• Is it manageable for you? In other words, is your deductible an amount you have available in the event of a covered loss?
• Which is more important to you: a lower insurance premium (e.g., monthly or annual cost for insurance), or a lower deductible? Consider the two costs at opposite ends of a spectrum: increasing one lowers the other. Would you rather pay more up front or when there’s a loss? It may depend on the size of your monthly budget vs. your emergency fund.
• Deductibles tend to apply to property damage only – not to liability coverage you may have as part of your homeowner’s insurance. Of course, policies vary, so check yours.
Understanding your homeowner’s deductible can help you avoid surprising costs down the road. When you have a loss, the amount of your deductible is subtracted – i.e., “deducted” – from the funds an insurer will pay after a covered loss.
Hurricane Deductible
Many homeowner’s policies include what is called a hurricane deductible, which is the amount of damages you must pay yourself after hurricane-related damages. It’s typically a percentage of your coverage A (dwelling) insurance: e.g., 2%, 5%, or 10%. An important note about a hurricane deductible is it is only applied once per calendar year. So, should you sustain damage from multiple hurricanes in the same year, you’ll only have to pay the hurricane deductible once.
All Other Perils (AOP) Deductible
An all-other-perils (AOP) deductible is usually a flat amount, and it is applied for each claim made. Currently, at Edison Insurance, our AOP deductible choices are: $500, $1,000, or $2,500. This is the amount of money you are responsible for paying before insurance kicks in. It applies for covered perils such as fire, lightning, hail, theft, vandalism, and other than named perils in your policy: check your policy.
Other Types of Deductibles
There are a variety of potential homeowner’s deductibles – it really depends on what is in your policy. Some of the most common deductibles, after hurricane and AOP deductibles include:
• Food Spoilage and Debris Removeable Deductibles
• Sinkhole deductible – If you have sinkhole coverage, this deductible is what you’ll need to pay if you sustain damage due to a Catastrophic Ground Cover Collapse.
• Roof deductible – Should your policy include a separate roof deductible, it won’t apply if another homeowner’s deductible is triggered. For example, if a hurricane directly or indirectly damages your roof and home, your hurricane deductible will apply – not the roof deductible.
• Flood or water damage deductible – A flood deductible only applies if you obtain flood insurance, which is not included in the standard homeowner’s policy. The amount of a flood deductible will depend on who is underwriting your flood coverage, and it may be either a percentage of your dwelling coverage or a set dollar amount. A water damage deductible, on the other hand, applies to water damage not caused by rising waters (flooding) or the weather, such as a burst pipe in the home.
A Word About Insurance Fraud
As the insured, you are responsible to pay your homeowner’s deductible. Be wary of a contractor, laborer, or anyone offering to pay your deductible for you or include it as part of any home repair work they are doing for you – this is illegal in Florida, for them and for you – pursuant to Senate Bill 2-D, which was signed into law on May 26, 2022.
Affordable Homeowner’s Deductibles in Florida
Your homeowner’s insurance agent can help you determine how much coverage you need, and what type of homeowner’s deductible is right for you.
At Edison Insurance Company, we’re laser-focused on protecting you, your loved ones, and your home. For more information about obtaining homeowners, condo, or renters insurance, call your agent or simply get a quote now.
