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All You Ever Wanted to Know About Insurance

Everything You Need to Know about Percentage Deductibles

Most insurance policies, including homeowners insurance, come with what is known as a deductible. When you make a claim, the deductible is the amount you'll have to pay out-of-pocket before your policy kicks in. While in many cases, your deductible will be a fixed value, it is also possible to get a percentage deductible for your homeowners policy. Here's what you need to know. 

How Percentage Deductibles Are Calculated 

Unlike a flat deductible, a percentage deductible is based on the value of your insurance policy. This is directly related to the value of your property, as you'll need to have enough insurance coverage to replace your home entirely in the event of a disaster. So, let's say your home is worth $200,000, and your insurance policy is for the same amount. With a 2-percent deductible, your out-of-pocket amount would be $4,000. If you made a claim for $10,000 in damage to your home, you would pay $4,000, and your insurance policy would cover the additional $6,000. 

When you renew your policy each year, you'll need to reevaluate the value of your home to ensure you still have enough coverage. If property values are on the rise in your area and your home's value increases to $250,000, your new percentage deductible will go up to $5,000. 

Other Considerations 

It is important to note that homeowners insurance deductibles will apply each time you make a claim. This is in contrast to other types of insurance, like medical insurance, where you will no longer have to pay out-of-pocket once you have met your deductible. It is important to keep this in mind when setting the deductible for your policy. 

In addition, the deductible only applies to property damage claims, not liability claims. For example, if a tree on your property falls and hits your house, you'll need to cover your deductible before your policy will cover the rest of the damage. If a friend of yours happened to be in the wrong place at the wrong time and was also struck by the falling tree, causing them to file a medical claim, the liability component of your policy will cover the entire cost, as the deductible does not apply in this category. 

Learn More About Percentage Deductibles 

If this all seems a bit confusing, that is perfectly understandable. Fortunately, the homeowners insurance experts here at Southern Colorado Insurance are here to help. We'll help you evaluate your options to choose a suitable homeowners insurance policy to meet your needs. Get in touch now to get started.