To begin, a Deductible is defined as:
(noun) – is the amount an insured is liable on each loss, before an insurance company will provide payment or reimbursement.
Back in the day, Homeowners, Renters, Condominium, and Commercial Property insurance policies had one and maybe a second deductible. Nowadays, you can possibly have 5 deductibles on one policy! Yes, I know that sounds crazy, but it’s real; AND coastal situations the reality is grim and there’s no letting up by carriers. So, let’s analyze this conundrum of insurance language:
A Fire Deductible is straightforward and applies to a regular loss by fire – there’s not too much to argue about here.
A Hurricane Deductible is for damage caused by a Hurricane – yes, that means that the loss was caused by a Hurricane with winds sustained over 74mph when it makes landfall. This sometimes can be 3% of your building value (i.e., $500,000 building would have a $15,000 Hurricane deductible). Yikes!
A Wind Deductible applies to a loss caused by a windstorm. But does the storm have to “named”? And if it is named, is it by the Weather Channel or by NOAA? By the way, this used to be the old-school Hurricane deductible, but now this provides insurers a way to make insureds have large deductibles for storms less than 74 mph, of which there are many more of.
A Hail Deductible applies to a loss caused by a hailstorm – sounds fishy but many people have made Hail claims over the past few years and have had their roof and/or top side of their cars repaired. Therefore, the insurance industry has instituted ways of paying less with higher deductibles.
A Water Damage Deductible applies to a loss caused by water. Now wait a minute, just when you might be thinking the above three deductibles would cover this topic…you would be wrong! Yes, unbelievably, the industry has found another way to reduce claims paid to insureds. The simplest way to explain this one is that a broken water pipe on the second story on a building that breaks and causes damage would have to deal with this deductible.
Lastly, the Theft Deductible is for things that are deemed a loss due to a theft. It is important to note that there are significant limitations to actual “theft coverages” within all Property insurance policies, and as a result most things that require theft coverage should be insured specifically (to where they typically wouldn’t have a deductible anyway).