When is the best time to learn what your deductible is?

It doesn’t take an insurance agent to guess that the best time is before you have a claim. With Hurricane Season coming up soon, it’s the perfect time to double check your deductibles. Many people often don’t know their deductible, which means they could be unprepared in the event of a claim. An important aspect to the insurance policies protecting your home that you should be aware of, is that there are usually different deductibles for different perils. Peril is just an insurance word for a source or a type of risk. Fire is one peril, and wind is another.

If your homeowner’s policy has a $2000 standard deductible and a 3% wind and hail deductible, that means that if your house burns down, you have to pay the first $2000 of the reconstruction costs. However, if your house is destroyed by a wind event, such as tropical storm or hurricane force winds, then you would owe 3% of the replacement cost your home is insured for, not the $2000. For a $250,000 home, that is $7500. Consider this example: A severe thunderstorm with strong winds rolls in overnight, and you wake up to a loud crash on your roof. You go outside to see that a dead branch has broken off of a tree near your house in the storm, and landed on your roof. The roofer tells you that the branch broke a couple of rafters and that some of the shingles have to be replaced, and this will cost $6000. This means that your policy is not going to pay anything in this situation, since it hasn’t met the wind and hail deductible.

Hurricanes also often cause flooding. Your homeowner’s policy won’t cover damage from a flood, meaning you would need a separate flood insurance policy if you want protection from that risk. Remember, floods can occur in areas that aren’t considered special hazard areas, and over half of all flood insurance claims come from properties outside those special hazard areas. Because floods are so destructive and unpredictable, we encourage every homeowner to consider a flood insurance policy. Your flood policy will also have a different deductible. The National Flood Insurance Program offers policies with deductibles ranging from $1000 to $10,000, although some lenders may not allow excessively high deductibles, so make sure to consult with yours if you are considering one at the top of that scale.

So, why is knowing that deductible in advance so important?

The main advantage is that it gives you time to save and prepare for the unexpected. If you happened to have your deductible saved in cash, then that branch falling on your roof goes from a massive headache to a much smaller inconvenience.

Your deductible is one of the most important things you can know about your policy. Knowing it helps you both prepare for a claim, as well as make informed decisions about your coverage choices. When reviewing your coverage with your agent, which you should do annually, make sure you go over each policy’s deductible. Having these annual check-ups help to avoid surprises after the unexpected happens.