Stephannie Ciantro, Claims Manager, explains deductibles and how they work.
When an adjustor evaluates a property damage claim and finds that there is, in fact, coverage, the insured will be responsible for a certain amount of the cost to repair or replace the item. This amount is called the deductible.
Deductibles can be applied per occurrence or per damaged unit, depending on the wording within your policy. For example, with damage from a fire, the deductible would apply once regardless of how many units were damaged, but if your policy has a per unit water damage deductible and a pipe bursts causing damage to 10 units, the deductible will apply 10 times.
Property damage deductibles can be based upon a specific dollar amount or the can be based upon a percentage. For example, a 2% wind deductible would be 2% of the total insured value of the property. There can be different deductibles for different types of losses. For example, you may have a building deductible of $2,500, but you may also have a water damage deductible of $10,000. This means that all other covered perils other than water damage would have a $2,500 deductible. You as the insured can request to have higher deductibles applied in an effort to lower your premium.
Most General Liability policies don’t have a deductible, though occasionally one will and in that case the deductible will work on an occurrence basis. For certain policies like Directors & Officers Liability, there will be a retention, which functions like a deductible in that it is the amount for which the insured is responsible to pay. It is always recommended to discuss any claims that occur with your broker, so that they can offer the right kind of guidance with your best interests in mind.
For more information, please contact us.