Flat vs. Percentage Deductible

Flat vs. Percentage Deductible

When buying home insurance, there are confusing terms that you have not heard before. Then, your agent says something like “percentage deductible” and you cringe at the thought of mixing math with insurance.

We’re here to help make the insurance buying process easier. One way we do that is by explaining insurance in simple, easy-to-understand terms.

Home insurance requires that you choose a deductible limit. What is a deductible? In summary, it’s the amount of money you must pay on a claim before the insurance company will pay the rest. However, often, the money does not come out of pocket, but comes out of the total amount the insurance company will pay out. As the insured, you are responsible for the deductible.

Now that you have a basic understanding of what a deductible is, let’s talk about the different types. There are options when it comes to deductibles. Two of the most common types for a home insurance policy are: flat deductible, and percentage deductible.

What is a flat deductible? “Flat deductibles” are the most common form. The amount which you will pay is determined when you purchase your policy. You will have options to pick from, a higher deductible and a lower deductible. There are pros and cons to both. (Why would anyone want a high deductible?

Flat deductibles work like this: Say your deductible is $5,000 and the claim is a $20,000 roof replacement. Your deductible comes out of the total payment and you receive a check for $15,000.

What is a percentage deductible? The deductible is a percentage of the total limit of the dwelling coverage A you have on your home. For example, if your home is insured for $200,000 and the deductible is 1% of that coverage, you are agreeing to pay a $2,000 deductible.

Having a high deductible or a percentage deductible can save you money on your insurance policy. These deductibles may work for you if you live in a low-risk neighborhood–how is the weather? Is there a high crime rate? Are you financially able to take on a higher deductible if an occurrence destroyed your home? Talk more with your independent insurance agent to pick the right type of deductible for your needs.

Deductible types vary upon coverages. Often, there are different types of deductibles for earthquake, hurricane, wind or hail, and flood insurance, all depending upon your insurance company and the state you live in. Due to the increase in hail claims, percentage deductibles are becoming much more common. Check with your independent insurance agent to learn about the types of deductibles you may have.

By: KayLynn P.


Do you have questions about your insurance? Find an insurance agent near you with our Agent Finder

Buzz Your
Insurance Agent

Search for a local agent with our agent finder map.

Agent Finder

Search All Blogs

Search
Generic filters
Exact matches only
Search in title
Search in content
Search in excerpt

Buzz Your
Insurance Agent

Search for a local agent with our agent finder map.

Agent Finder

Want to learn more about our blog writer?

Read more about KayLynn's background.

Click Here

Search All Blogs

Search
Generic filters
Exact matches only
Search in title
Search in content
Search in excerpt

Why You Need Business Insurance Even if You Rent Your Business Space

You Don’t Need to Have a Bricks & Mortar Store to Benefit From Business Insurance

Why Life Insurance Should Be a Fundamental Part of Your Financial Plan

How Are You Protecting Your Money Machine?

The Ten Most Frequent Causes of Automobile Accidents

Powerful Steps You Can Take to Reduce Car Accidents

Whatever Happened to These Rock Stars?

They Created and Performed Some of the Greatest Music of Our Time

Etsy and Ebay and Work From Home Businesses

Signs Your Hobby May Becoming a Home-Based Business

“Do Women Live Longer Than Men?” and Answers to other Other Life Insurance Questions

Interesting Answers to Some Common Life Insurance Questions

How States Determine If You Have Car Insurance

“Trust But Verify” Is the Attitude Most States Take

Are You Asking the Right Questions About Homeowners Insurance?

The Right Answers Often Begin with the Right Questions

Smartphones: How and How Much We Use Them May Surprise You

See How National & Worldwide Trends Compare with Yours

Own a Rental? You May Need Business Insurance

Do You Have the Appropriate Insurance to Cover Your Investment Property?

Leave a Comment