What does your deductible mean to you?

We are all familiar with our insurance policies having deductibles whether it’s for health insurance, auto and home insurance or commercial insurance.  In the past our standard deductibles (what we are most familiar to selecting) would range anywhere from $0-$2,500 for auto and home insurance, $250-$1,000 for health insurance and $1,000-$5,000 for commercial insurance.  Have you looked at your deductible in the last year?  Did you notice any changes to the deductible?

Right now in Oklahoma our deductibles vary greatly due to the catastrophic wind and hail losses we have sustained.  The loss amounts are in the billions of dollars for our state alone.  You might still see the above mentioned deductibles in your policy listed under “All Other Perils except Wind and Hail” and then you will see another deductible listed that states 1%-5% W/H (Wind and Hail) deductible.  What does that mean exactly?  That means that for a loss that is classified as a Wind and Hail loss, your deductible amount will be 1%-5% of the dwelling or building value listed on your declarations page.  For example, if the dwelling (house) is insured for $150,000 with a Wind/Hail deductible of 2% and you suffer a hail loss to your roof, your out of pocket portion for the claim would be $3,000.00.  Imagine what that figure would look like if your business was insured for $1.5 million and you had a deductible of 3% on wind and hail.  That’s a $45,000.00 deductible that you would be responsible for!  If you are a business owner that owns multiple locations, that deductible could apply to each location as well.  That is an amount that none of us would be happy about in the event of a loss.

As we get closer to 2013, we are seeing insurance rates and deductibles rise because of the catastrophic weather we have suffered across the nation and especially in Oklahoma.  Now is the time to really inform yourself on your coverage’s and deductibles and what they mean to your bottom line.  Taking a proactive role in risk management for your business and/or home insurance is imperative now more than ever.  There are many ways you can help reduce your hazards, and control your own premiums and coverage’s.  Talk to your agent and reach out to companies such as TCOR, Total Cost of Risk, for advice and direction for your upcoming renewal.  Even though we cannot prevent Mother Nature and across the board rate increases within the insurance companies, does not mean you can’t help control your own risks, coverage’s and deductibles.  Stay proactive and informed about your policy!