Insurance Deductibles 101: When, Why, and How They Apply

in this video learn what a deductible is when you apply it and how to explain it to the insured starting now adjuster TV is brought to you by exact Weare training you know the creators of Xactimate X1 and Xactimate mobile let's get you an unfair advantage in hiring and closing claims and get you certified as an Xactimate expert right now at the link in the description below a feature of um Insurance kind of in general and obviously in the context of of property insurance is the concept of a deductible and a deductible is kind of a way for and I haven't really found this in practice to be totally true because whenever I try to ask request a high deductible they say well it's only going to change your premium by $9 like what doesn't make any sense um it's supposed to be the deductible is supposed to be the part that that you as a property owner want to take on for yourself if you do have a claim right having a hire deductible um Can discourage people from um filing claims right because if it's you're like I mean I have a $5,000 deductible if I have a you know my $99,000 claim is it really worth it to file claim and have my rates go up for $4,000 bucks right um and being a consumer of insurance with Auto and homeowners insurance and I've got liability insurance and all kinds of stuff for this place um when I say well or health insurance or whatever like well if I have a high if I keep a high deductible what's that going to do to my rate and generally doesn't do anything to your rate so it's almost like well why bother having a high deductible that's that's about my experience anyway but the deductible is the part of the claim that the policy holder takes on you know from a philosophical standpoint I'm not sure here I see the point of do of having deductibles um if you're paying a premium every month or every year uh for the insurance company to you know pay for stuff that happens to you that you you claim for covered perils or whatever why not just pay for the whole thing why have it deductible I don't know it it could be that's you know there's I mean sure they save a certain percentage of money for that and having any kind of a deductible probably discourage is like little tiny like nickel and dime claims um but you know is what it is but long and short deductible is the insured part of any claim that they have right um when we apply the deductible the deductible is usually or should be applied as the last thing right when we talk about a coverage analysis we'll go into this more depth but you have your you know you have your RCV right um which is the grand total for the whole you write up everything it's this could possibly be damage that's that you could pay pay for is covered um then you apply depreciation right then you apply limits policy limits and then youly the very last thing would be your deductible right so your deductible is the thing that you know the actual cash value uh the RCV is 10,000 bucks the ACV is um 5,000 bucks and you have $500 deductible then their first check will be for $4,500 right that makes sense pretty straightforward um explaining the deductible to the homeowner is really as simple as saying you know um you really don't have to explain this to most people because it's they they may not understand a lot about insurance um but the deductible they do understand for the most part it's just this is your part of the claim right this is the part that you agreed to when you bought your insurance you know you because they'll say well $2500 deductible you know unless it's like a a mandatory like win tail deductible like a 1% or 3% or whatever it is you just have to be like and even in that case it's like this is the part you know you're living in a place where you know hail happens every single summer and everybody gets a new roof every single summer and insurance companies can't afford to do business here unless they unless you take on some more of this risk if you're going to live here you're never going to wor it like this but this is the the thought you know this is kind of the the mindset I guess um if you're going to live in a place that has high risk then you need to take on some of that risk yourself um because we can't give you like you know for for a person living in Florida where there's frequent Hurricanes versus somebody living in you know I don't know we'll say what a place that has mild weather you know Hawaii you know aside from wildfires obviously um for somebody living in Hawaii where they just don't generally have that much in the way of like severe weather the rates will be different for different reasons but if you if it was a straight Apples to Apples Florida's going to be more expensive than Hawaii because of the higher risk right they're probably going to be more expensive in Hawaii because of the cost of living and whatever but that's a different story just as a straight straight line comparison so we're talking about the deductible with the homeowner this is the part that that you agreed to when you have when you you know when you buy a house and you have you have to have home owners insurance you know if you have a mortgage um the deductible is your part of of the claim right and you know there's there may be like they used to have like I mean I've seen like $100 deductibles like you got you go to Grandma's house and she's Liv little teeny tiny like post World War II house and she's sitting her in her little rocking chair and you're explaining her claim to her oh your deductible is 100 bucks she may have had cut she may have lived in that house for 50 years and got a $100 deductible 50 years ago they just kept it right she's grandfathered in but if you go and buy a house right next door to hers and buy insurance from the same company the lowest possible deductible that they may have is 500 bucks or ,000 bucks right unfortunately sometimes we have to say no on claims learn about exclusions in this next video right here