Can you explain an insurance deductible in easy ways?
Short answer. A deductible is the part of a covered loss that you pay before your insurance pays the rest. If your deductible is $1,000 and a storm causes $9,000 of damage, you cover the first $1,000 and the insurer covers the other $8,000. If the damage is only $700, the insurer pays nothing.
Three easy ways to think about it
- Your share comes first. Like a co-signer who only steps in after you have paid your part.
- It is a line on the check. You do not mail the deductible to the insurer. The insurer just subtracts it from what it pays.
- It is the trade-off for a lower premium. A higher deductible means a lower premium, because you agree to handle more of each loss yourself.
Three simple roof examples
- Small damage: wind tears off a few shingles, repair costs $600, deductible $1,500. Insurance pays $0. You pay the roofer $600.
- Big damage: hail ruins the roof, replacement costs $14,000, deductible $1,500. Insurance pays $12,500. You pay the roofer $1,500, and the roof is fully paid.
- Percentage deductible: your policy says 2 percent for wind and hail, and your dwelling coverage is $300,000. Your deductible is $6,000, not 2 percent of the repair.
Two rules people miss
- The deductible applies to each claim, not once a year.
- In Georgia, a contractor cannot legally pay, waive or hide your deductible. If a roofer offers, that is a warning sign.
Read more in percentage deductibles, can a roofer pay your deductible and ACV vs RCV.