Homeowners Insurance Deductibles

• A traditional homeowner's policy provides coverage for losses involving the dwelling and outbuildings, your personal property and living expenses if you are displaced from your home. A deductible will normally apply to these losses. Your insurance company may also offer a different deductible amount for damages from hail or wind, such as to your roof. Your homeowners liability coverage, which pays if someone is hurt or her property damaged due to your negligence, does not carry a deductible. Deductibles on homeowners insurance typically apply to each claim. The deductible on your homeowner's policy may be a flat amount, such as $1,000 or $1,500. However, it may also be a percentage of the total home value under your policy. As an example, if your policy provides $300,000 in coverage to rebuild your home, and your policy has a 3 percent deductible, you would be liable for the first $9,000 of every claim.
  
  

Medical Insurance Deductibles

• Health care plans typically have an annual deductible amount per person and per family, if you cover your spouse and children on the same policy. For example, a policy may have a stated deductible of $250 per person and $500 per family. This means that each individual would have to pay $250 in covered expenses before the insurance begins to pay. However, if there are four people in the family and each person incurs $125 in covered expenses, the deductible is met for all four. Deductibles for health insurance apply on an annual basis, typically the calendar year. Your policy may also include a provision allowing expenses during a set grace period, such as the first quarter of a year, to apply to the previous year or the current year, but not both. Your policy may also cover certain services, such as immunizations or dental cleanings, without applying the deductible first.
  
  

Automobile Insurance Deductibles

• Auto insurance deductibles apply to each claim you make against your policy. Collision and comprehensive coverages are the most common types subject to a deductible. This means that if your policy has a $1,000 deductible and you incur $1,200 in damages, the insurance company will pay only $200 for your claim. If the deductible is $1,000 and the damages are $500, your policy will make no payment. Deductibles do not apply to liability coverage, so if you are collecting on your claim from another driver's insurance company, you will receive the full amount the company rules appropriate. Depending on the laws in your state, supplemental coverages, such as towing, may also be subject to a deductible.
  
  

Why Insurance Companies Use Deductibles

• Deductibles lower the amount the insurance company must pay if you have a claim. They also reduce the manpower costs the company must absorb to process claims for a low dollar amount. Such savings mean that the company can charge lower premiums. The higher the deductible on your policy, the lower your premiums will be.