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Property Insurance and Your Deductible

Do You Have The Right Coverage and Know Your Deductible?

Insurance has the potential to save you from hundreds of thousands of dollars in loss, but it's only as effective as the policy itself dictates. That's why it's important to make sure that you have the right type of insurance, and that you pay close attention to what your policies will, and will not, cover. Below is a quick list of different types of property insurance that you may already have, or need, and what you need to consider when taking inventory of your policies.

l  Damage to House (or Building.)
This type of insurance (Property and Casualty) covers any physical damage to the structure. This can cover you if your entire building or home has been destroyed, such as in a natural disaster, but you will need to confirm with your insurer if it covers specific natural disasters, as there are also policies which will cover tornado and hurricane damage, for example. The intention is to help you recover and rebuild as well as prevent a

l  Damage to other structures on property.
This can cover garages, sheds, fences, and other types of property which are adjacent to your home or building, and which you own. It can also cover electrical sheds and other structures in the cases of commercial insurance, but again, it's a good idea to confirm this with your insurance provider.

l  Personal Property
For your belongings and the belongings of your family members that can be lost during an accident, stolen, or destroyed. Personal property insurance policies can cover the maximum estimated value of those items. It's also one of the most fraud-wrought types of insurance policies, which is why it's important to thoroughly document the items that you have and their values so that you can more easily work with your insurance provider to have your claim processed.

l  Flood insurance / Fire insurance.
An estimated 20% of the homes at risk for a major flood event are covered by flood insurance. That's 80% which are not, and it's due in large part to the misconception that other types of insurance will cover you in the event of a flood. The same is true of fire; fire insurance may need to be taken separately if you want to be covered. Again, speak with your insurer to learn more about what your policies do or do not cover. Never assume you are covered without confirmation.

l  Your Deductible.The deductible is the amount you will pay out of pocket before the insurance coverage takes over. The amount you choose for your insurance deductible depends on how much you're prepared to pay if you have a covered loss. For instance, if you choose a $2,000 deductible, then you'll pay the first $$2,000 of a claim. This is your responsibility. Typically, the higher the deductible, the lower your premiums.  A word of caution: Beware of the contractor that offers to pay your deductible! In many states this is not legal, and in all states, it is certainly not ethical.  It usually means the contractor is “padding” the invoice to make up for lost revenue.

When you call a contractor to assist you with a disaster clean-up, they will usually ask you for the deductible as the initial deposit or partial payment. You should always know what your deductible amount is, and be prepared to pay that amount to the contractor when a loss occurs. It is your responsibility and part of the insurance contract.

Author:  Dick Wagner, restoration consultant, commercial sales coach, insurance deductible, personal property, property casualty

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