Understanding the Different Types of Homeowners’ Insurance Deductibles

Understanding the Different Types of Homeowners’ Insurance Deductibles

When you own a home, you also need to protect your home with a homeowners’ insurance policy. Although you may have this protection, you may not fully understand the fine print or details of the policy itself. Insurance jargon can be difficult to understand, but it is important that you learn how you are covered in the event of property claims in Orlando, FL. It is important to understand deductibles that are relevant to your policy. These are a few things you should understand about the different types of deductibles in your insurance plan.

What is a deductible?

A homeowners’ insurance deductible is the out-of-pocket amount that you are responsible for paying before your coverage kicks in. The higher your deductible, the lower your insurance premium will be. After you pay your deductible, the claim compensation from your insurance carrier is the damage amount minus the amount of your deductible.

Percentage-based Deductibles

This type of deductible is often used for catastrophic events or large losses that are unfortunately common, like hail/wind damages or hurricane damages. When you live in an area that is prone to natural disasters, like hurricanes in Florida, your insurance policy may have a separate percentage-based deductible for instances like hurricane damages.

For example, if your home is $200,000, and your insurance policy has a 1% hurricane damage deductible, the deductible will be $2,000. The percentage deductibles vary from between 1% and 10%.

Dollar-value Deductibles

Flat-dollar amount, or dollar-value, deductibles are often used for most common property damages or losses. A standard homeowners’ policy has a dollar-value deductible of between roughly $500 to $2,000 depending on your policy.

Split Deductibles

Split deductibles often take into account the type of damage or claim that is filed. This means that the higher deductible which may be percentage-based even if they generally use dollar-value deductibles can apply to specific situations or hazards. Split deductibles use a dollar-value deductible most of the time, but they may switch to percentage-based deductibles in certain instances, like hurricane damage claims. If this occurs, the homeowner may have a specific deductible amount designated for specific reasons.

How do home deductibles work?

Some homeowners’ insurance policies only use certain types of deductibles no matter what type of claim is filed. When you are choosing your homeowners’ insurance deductible, you need to consider your finances. If you raise your deductible, you will likely have to cut your insurance costs in half and pay more money up front.

Many people choose higher deductibles simply because they want to reduce their out-of-pocket expenses. However, this can mean you pay more in the event of a claim. You need to weigh your options and consider the best situation for you.

If you find yourself filing property claims in Orlando, FL, you want to trust our insurance adjusters to help with your process. Contact the experts at Ultra Property Damage to hear more about our services today.

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