Insurance deductibles are thresholds for the amount of money a policyholder must meet in damages or pay at settlement, prior to their insurance coverage stepping in and paying you for covered losses.

Deductibles are either a specified dollar amount, a percentage of the claim amount, or a specified amount of time which must elapse before benefits are paid.

For example, if your deductible is $1,000 and your home experiences as $20,000 covered loss, your insurance carrier will pay you $19,000 once you have paid your deductible. Generally, the higher the deductible you select, the lower the premium will be for your insurance coverage.

Hurricane Deductibles

With Hurricane Season a month away, it is important you understand what Hurricane Deductible is and how they are determined. Hurricane deductibles are applied to insurance policies located in hurricane-prone states, such as Florida. These deductibles are typically based on a percentage of your Coverage A for homes, and Coverage C limit for condos. Hurricane Deductibles are applied when storm watches or warnings have been issued for any part of the state.

It is important to keep in mind, higher deductibles may be instituted in higher risk areas, such as coastal regions. Specific details, including the intensity of the storm for the deductible to be triggered and the extent of the high-risk area, can vary by the insurance carrier and by state.

All Other Peril Deductible

All Other Peril Deductible (AOP) is the deductible which applies to all other covered losses including a fire, theft, or lightning strike. Unlike a hurricane deductible, AOP Deductibles are typically based on a set dollar amount. These deductibles typically apply to your Coverage A, B, C, and D portions of your policy.

How to choose your deductibles

When purchasing home insurance or making changes to your current policy, an important aspect of determining your deductible is how it will affect your premium. Your premium is the amount of money your insurance coverage will cost. As mentioned before, the higher your deductible is, the lower your premium will be and vice-versa. Although it may seem like a reasonable choice to keep a higher deductible to have a lower premium, you could run into significant financial stress in the event you need to file a claim.

We recommend you take time to review your policy and deductibles and contact your local agent should you have any questions or need to make changes to your policy.