When choosing insurance coverage and policies, the premium is a very important deciding factor. The premium is obviously what you pay annually for your insurance policy. However, another important deciding factor (that we hope to never have to use) is your deductible.
Every insurance company is different and offer various deductibles. Theoretically speaking, the higher your deductible, the lower your insurance premium will be and vice versa. It is up to you, the consumer, to decide whether a lower premium or a lower deductible is more important (see our recent blog post about the benefits of having higher deductibles).
However, making that decision can sometimes get confusing when you start hearing words like named storm, wind and hail, flat rate, etc. We’ve put together a little list to help you keep it all straight while shopping for insurance.
Named Storm (or Hurricane) Deductible
This deductible only applies in the event of a hurricane or tropical storm. For example, in 1989 when Hurricane Hugo came through Charleston any damage and claims would be subject to a policy’s “named storm deductible.” However, if there were to be a bad thunderstorm or even a tornado, that would fall under your “all other perils” (AOP) deductible. Luckily for those effected by the flooding in early October, the South Carolina Department of Insurance has issued Emergency Regulation 69-77 clarifying that Named Storm and Hurricane Deductibles do not apply to this event.
Wind & Hail Deductible
This deductible applies to any sort of damage and claim due to an act of God; i.e. thunderstorm, tornado, windstorm, hailstorm, etc. If you carry a wind & hail deductible, this also includes losses due to named storms or hurricanes. The down fall of a wind & hail deductible versus a named storm deductible is that more events can fall under this deductible meaning you (the insured) have a higher chance of paying more towards more claims.
All Other Perils (AOP) Deductible
Your policy will always have an AOP Deductible. We like to describe this deductible as all other covered losses not associated with wind & hail or named storms.
Often times, wind & hail, named storm or your hurricane deductibles are between 2 and 5 percent of your home’s dwelling value, not a percentage of the repair cost. Many insurance consumers do not realize that they percentage is applied to the dwelling value until it is too late. As an example, if you have a $500,000 replacement cost value of your home and you have a 2% named storm deductible then your deductible is $10,000. So if you had $15,000 of roof damage that was covered on your policy under this scenario, you would receive $5,000 back.
Flat Rate Deductible
This is an agreed-upon amount that you are responsible for paying in the event of a claim. It does not depend on the dwelling value, like a percentage deductible does. Both Wind & Hail and Named Storm Deductibles can be flat rate deductibles. It depends on the location of your home and the way that each individual insurance company rates your home.
Confused yet?! Contact Mappus and we can walk you through the steps so you understand how your policy will respond in the event of a loss.