Every property insurance policy includes a deductible that shifts some cost of loss to the policyholder. The deductible is usually a dollar amount that can range from $500 per loss to $50,000 or more.
The deductible must be satisfied before the insurer makes any payment for a covered loss.
For some coverages, the deductible may be expressed in other terms. For example:
- Hurricane protection may be subject to a deductible equaling a percentage of the policy limit or the dollar loss.
- Business Interruption (Earnings) insurance may be triggered after a deductible expressed as a certain number of hours following direct property damage.
- Articles scheduled by a special floater endorsement or "carve out" may be subject to yet a different deductible.
- Flood protection may be subject to a deductible equaling a percentage of the policy limit or the dollar loss.
- Earthquake protection may be subject to a deductible equaling a percentage of the policy limit or the dollar loss.
Your organization should select a property deductible based on its property claims history, current financial condition, and the premium savings you can realize by assuming more front-end risk.