Your insurance policy has a “deductible” that you are responsible for when your home or business suffers a covered loss. Depending on your Policy and the type of loss, the deductible will be a fixed amount or a percentage of the coverage limits (e.g. $1,000 or 5%).
The purpose of the deductible is so that you share in the loss. For example, let’s say your home sustains damages of $30,000 from a broken pipe. If your deductible is $5,000, the insurance company would owe only $25,000. If your property sustains damages of $50,000 from a hurricane, and you have a dwelling “Coverage A” limit of $100,000, and a 5% windstorm deductible, you would be responsible for the first $5,000 of repair cost.
However, you will not be responsible for your deductible if your loss exceeds policy limits. If you have coverage up to $30,000 but your loss causes damages of $35,000, your deductible should be “absorbed” as you have already shared in the loss. In this instance, your insurance company must tender full policy limits without subtracting the deductible.
If you suffer a covered loss make sure your insurance company has correctly applied your deductible for the type of loss as shown on the policy declaration page. It is not uncommon to find that an insurance company has improperly calculated or applied the policy deductible.
If you have a question about which deductible should be applied, or how the deductible should be calculated, speak to one of the expert Florida property insurance attorneys at Danahy & Murray. All consultations are free.