Day: August 8, 2014

Understanding the Basics of Insurance Deductibles

Posted on by shasha insurance

To get the most out of a car or home insurance policy, it is important to understand the roles deductibles play. A deductible is the amount deducted from an insured loss. When a damage claim is filed, the deductible is the amount of money a policyholder must pay upfront. It may be a percentage of the policy’s total or a set dollar amount. Larger deductibles are associated with smaller premiums. To find the verbiage concerning deductibles, consult the front page of the auto or homeowners policy. Deductibles are subtracted from the claim amount. For example, if a person with a $500 deductible files a claim for $10,000, that policyholder will receive a check for $9,500. However, if that individual’s deductible is calculated using percentages, the amount may differ. With percentages, the variable is calculated from the total claim and then subtracted from the total.

In many areas of the United States, deductibles are increasing. This is especially true in states prone to hurricanes. Property damage deductibles work differently than those for other types of insurance. For example, a deductible applies each time a claim is filed for auto or homeowners insurance. However, a deductible applies only once each year for health insurance. There are some exceptions for damage-related insurance products. In some cases, hurricane coverage has a per-season deductible. The following points cover some of the most important deductible information.

Deductibles Do Not Apply To Liability Claims

While there is no deductible for a liability claim with a homeowners or auto policy, there is a deductible for property damage. Deductibles apply to claims made to the comprehensive policy. In homeowners insurance, deductibles also apply to damaged items inside the insured structure. However, they do not apply if a homeowner is sued or if a medical claim is filed by an injured visitor.

Higher Deductibles May Save Money

One of the easiest ways to cut expenses is to raise deductibles for homeowners and auto insurance policies. Increasing an auto insurance deductible from $200 to $500 reduces collision and comprehensive premium costs up to 30 percent. Raising the deductible to $1,000 may result in a savings of more than 40 percent. Remember this is the out-of-pocket amount that must be paid regardless of the amount of the claim.

Flood Insurance Deductibles Vary

Since flooding is not covered in standard homeowners policies, it is sold by the NFIP and private insurance companies. There are several different choices of deductible amounts for these policies. Keep in mind that some mortgage companies require homeowners to keep their deductibles under a specific dollar amount. Flood coverage for vehicles can be obtained with an optional comprehensive plan.

Various States & Companies Affect Deductible Amounts

Insurance is a state-regulated product, and insurers are required to follow their state’s rules. The laws affect how deductibles are worded in policies and how they are implemented. Since there are a wide range of deductibles found in each state, it is best to compare policies. Keep in mind that doubling the deductible may save more than 20 percent on the cost of a policy.

Percentage Deductibles Apply To Hurricanes, Hail & Earthquakes

Earthquake deductibles may be much less than 10 percent or as high as 20 percent of the structure’s replacement value. Insurance rates are higher in states such as Nevada, Utah and Washington. Consumers in these states may choose higher deductibles to save money. There are special earthquake policies for California residents. To learn more about areas prone to earthquakes, discuss them with an agent.

There are two separate types of wind damage deductibles. The first is a hurricane deductible, which applies to wind damage sustained from hurricanes. The second type is a windstorm deductible, which applies to damages sustained from any other type of windstorm. Hurricane deductibles depend on specific triggers. These are usually designated by the National Weather Service, individual states and insurers. The triggers apply when a storm is officially deemed a tropical storm or hurricane. To learn more about how these triggers work, discuss them with an agent. Some states allow set deductibles. However, communities in high-risk coastal areas may have mandatory percentage deductibles.

Understanding Tree Damage & Your Homeowners Insurance

Posted on by shasha insurance

When a tree falls on a house, the first thing most homeowners wonder is whether their insurance will cover the damage. Fortunately, they do, and the coverage inclusions are clear. If a tree falls on a home or other insured property structure, a homeowners insurance policy provides coverage for the structure itself and the items inside of it. This type of coverage includes trees that fall due to hail, lightning or wind.

The fallen tree does not have to be owned by the policyholder for a claim to be approved. For example, if a tree owned by a neighbor falls over the property line onto a policyholder’s home, the affected homeowner’s policy will cover the damage. The affected homeowner must simply file a claim with his or her insurance company. Trees, branches and shrubbery have a tendency to become hazardous objects during storms, and insurance companies are aware of this fact. This is why they do not conduct extensive investigations to figure out exactly where the offending tree or shrub came from. Their duty is to assess the damage, figure out the reimbursement cost and issue a check.

In some cases, the insurance company may try to collect money from a neighbor’s insurer. This process is called subrogation, and it is usually initiated when the insurer feels that the offending tree was not kept well. However, this is the insurance company’s job. If the company is successful in proving the tree was poorly maintained, the policyholder affected by the damage may receive a reimbursement for his or her deductible amount.

If a tree falls on a home or insured structure, there is also coverage for the cost to remove the tree. This amount is usually between $500 and $1,000. Reimbursement numbers may vary from one insurance company to another. The amount also varies depending on the type of policy chosen. However, if a tree does not affect a home or structure, there is usually no reimbursement for damage or removal. Some insurance companies may extend special coverage for trees blocking driveways or handicapped ramps.

In addition to the previous coverage inclusions, standard homeowners insurance policies allow protection for tree damage due to theft, explosion, fire, lightning, vandalism, malicious mischief and vehicles owned by others. However, coverage is usually limited to a small percentage of the amount of insurance on the home or other property structures. As a rule, most insurers place a limit of $500 for any shrub, plant or tree. Shrubbery and trees grown for business purposes require special business insurance policies. To learn more about this type of coverage, discuss the options with an agent.