A deductible is the amount you share if you have a claim. Generally a deductible is $1,000 for home insurance and $500 for auto insurance. If you have an at-fault accident or need a new windshield, your vehicle is vandalized or hit-and-run for a few examples, you would pay the first $500, and your insurance company would pay the balance. On the homeowner’s side, if you had a fire or a break in or a windstorm damaged your roof or caused a tree to fall on your property for some examples, you would pay the first $1,000 and your insurance company would pay the balance.
Often people use their deductible as a guide to determine if they want to make a claim or not. Most people want to safeguard their claims free status and the discounts, perks that come along with it. If a loss is minor and around the deductible amount they may decide not to proceed with a claim for a minor event.
There are some examples where a deductible may be waived, or not applied. Usually there is no deductible to repair a stone chip in your windshield. Some companies reward their long time claims free customers by not applying a deductible to their first homeowners claim.
Usually, if you are 100% not at fault in an accident there is no deductible (as it is not your collision coverage that responds to that situation). If both drivers in an accident are found to be 50% at fault each, your insurance company may only apply half of your deductible.
Some companies offer the opportunity for their customers to have a disappearing deductible. This means the deductible gets a little lower each year you are claims free until it has disappeared all together.
Typically, a deductible is relative to the risk. An average home and average automobile will typically have a $1,000 or $500 deductible. If you have a high value home or a very valuable vehicle, a minimum deductible may apply. It may be a set amount such as $1,500 or $2,000 and in some cases may be a percentage of the value of the item insured. Sometimes people choose to have a higher deductible than is necessary because the higher the deductible or the more you are willing to participate, the lower your premium will be.
Some insurance companies have different deductible amounts for different types of claims, generally it is a higher deductible for water damage losses to homes and a lower deductible for other events such as fire or windstorm.
For more information please contact a broker at Morison Insurance.