All Florida homeowners insurance policies carry a deductible usually ranging from $500 to $2,500. Just like an auto insurance policy, the deductible is the policyholder’s financial responsibility for a portion of the damages in the case of an insurance claim. Unfortunately, deductibles have led to some confusion among policyholders deciding if they should file an insurance claim.
Occasionally, I hear concern from policyholders who tell me that they don’t want to file a homeowners insurance claim because they don’t have the money to pay their deductible or are concerned about having to come out of pocket for the deductible. With a $2,500 deductible, it would be impossible for some families to meet this financial burden, especially when faced with potentially other costly repairs and damages to the their home stemming from the insurance claim. However, it’s important for policyholders to understand that under a typical Florida homeowners insurance policy, you do not have to pay your deductible to the insurance company in the event of an insurance claim; the amount of your deductible is simply reduced from the total payment issued to you by the insurance company for the damages to your home.
For example, if you suffer a plumbing leak that causes $20,000 of damage to your home, and you have a $2,500 deductible, your insurance company would issue you payment in the amount of $17,500. You do not have to pay the insurance company your $2,500 deductible. In fact, you do not have to come out of pocket at all as long as you can find someone to make complete repairs to your property with the amount of money paid by the insurance company. Whether the insurance company paid enough to begin with is another issue previously discussed here.
There are however certain circumstances where the payment of your deductible can change. Depending on your insurance company, you may have an insurance policy that provides the insurance company with the “right to repair” or “option to repair” your home as previously discussed in our blog post entitled “The Insurance Company’s Right to Repair and Option to Repair; What are Your Rights and Options?” If your insurance company utilizes this process, rather than paying you directly for the damages to your home, the insurance company will choose and send their own contractor to make repairs to your home. The insurance company then pays their chosen contractor directly for the cost of repairs. In this situation, depending on your insurance company, you may be obligated to pay your deductible directly to the insurance company’s contractor before the work begins.
If you or anyone you know has questions about insurance policy deductibles, do not hesitate to contact us.