In short: a deductible is the part of a claim that you pay yourself before the insurer pays the rest. It can be a fixed amount or a percentage, and some policies apply a different deductible to particular events, such as named storms. The right deductible depends on what you could comfortably pay if you had to make a claim. This article is general information, and your policy wording sets the actual terms.
A simple illustration
The numbers below are made up to show the idea. They are not a quote and do not describe any real policy.
Suppose repairs after covered damage cost 10,000 and the policy has a deductible of 1,000. The insurer would pay the covered amount above the deductible, which is 9,000, and you would pay the first 1,000. If the repairs cost less than the deductible, there may be nothing to claim.
Fixed amount or percentage
- A fixed deductible is a set sum, such as a stated amount per claim.
- A percentage deductible is calculated from a figure in the policy, often the sum insured. The money amount it produces therefore rises with the sum insured, which is why it is worth working out in money terms before you need it.
Named-storm and hurricane deductibles
Some policies apply a separate deductible to damage caused by a named storm or hurricane, often as a percentage. In St. Maarten, where the Atlantic hurricane season runs from 1 June to 30 November, this is one of the points many people ask about. Ask:
- Does a separate deductible apply to wind, to flood or to both?
- Is it a percentage, and of what figure?
- Does it apply to each building, each item or each event?
- How does the policy define the event?
The hurricane insurance page explains more about how policies may treat storm damage.
Deductible, excess, co-payment and waiting period
These terms are sometimes mixed up:
- Deductible or excess: the amount you bear on a claim.
- Co-payment: a share of each cost that you pay, common in health policies.
- Waiting period: a delay between the start of a policy, or of a loss, and the time a benefit can be claimed, found in health and disability policies.
Different insurers use these words slightly differently, so check the definitions in the policy.
Choosing a deductible
A higher deductible often means a lower premium, and a lower deductible often means a higher premium, though this varies by insurer and by type of cover. A useful question is: if I had to pay this amount tomorrow, could I? People also think about how often they might claim and how large a claim could be.
Questions to ask your advisor
- What deductible applies to each kind of claim under this policy?
- Is it a fixed amount or a percentage, and what is the money amount today?
- Does it apply per claim, per item or per event?
- How much would the premium change with a higher or lower deductible?
You can compare how deductibles differ between quotes using our comparison shopping page, and the comparing quotes article lists what else to look at. To ask about your own policies, request a call back or call +1 721 542 5078.
This website gives general information about insurance. It is not personal advice, a recommendation or an offer of cover. Terms, limits, exclusions and availability depend on the insurer and the policy wording.