As the insurance industry continues to evolve, you may notice some changes to the way your policy works. We'll have a deep dive into what this means for you.
Facing widespread challenges due to increased frequency and severity of natural disasters + rising claims settlements due to surges in labor & materials costs, insurance carriers are tasked with remaining financially solvent and offering affordable premiums to families like yours.
While you have undoubtedly noticed rising premiums in the last few years, a new trend is being rolled out to help curb those costs in the coming years: percentage-based deductibles.
Essentially, your deductible for certain perils (most commonly wind & hail) is relative to the amount of coverage on your property. Your deductible is typically your our of pocket cost during a claim, as well as any possible depreciation on the roof (more about that below).
Let's say your home is insured for $425,000. Here are some scenarios:
1% deductible, $425,000 dwelling coverage x .01 = $4,250 deductible.
2% deductible, $425,000 dwelling coverage x .02 = $8,500 deductible.
5% deductible, $425,000 dwelling coverage x .05 = $21,250 deductible.
In this scenario, if you have a 1% deductible, and the cost of a roof replacement is $27,000, and you have full replacement cost, your net claim would be $27,000 - $4,250 = $22,750
Many carriers are now also factoring in depreciation due to the age of the roof, especially for roofs that are older. Carriers have their own depreciation chart and terms, so we recommend checking your exact policy terms. This is above and beyond the your deductible. It's always important to review the renewal terms of your policy, and make sure it still fits your needs.
South Lake Agency Insurance Brokers is always happy to help answer any questions that you might have around this. Feel free to contact us or get a quote anytime!
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