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Fire & Water - Cleanup & Restoration

The Basics of Insurance Deductibles

7/6/2021 (Permalink)

Flooded building in Weymouth, MA.

Here's How Storm Deductibles Typically Work

Your commercial insurance coverage depends on the specific needs of your business in Weymouth, MA, and several factors can play a role. If, for example, you live in a Special Hazard Flood Area, storm insurance may be mandated by law. Some type of flood coverage is probably a good idea if your area experiences frequent precipitation or rainy seasons. The amount of money you end up paying with a storm policy is a delicate balance of your premium and your deductible. Essentially, the deductible is the money you must pay out of pocket before the coverage kicks in. 

Typical vs. Trigger

Usually, an insurance policy will have a standard deductible. That is, there is a set amount that you will be expected to pay for restoration services or repairs before the insurance company will contribute. Some storm insurance, however, has a trigger clause that activates a different set of rules for the deductible if a storm is nigh. Required conditions for a storm deductible to be triggered often include:

  • Official storm watch or warning issued by the National Weather Service
  • The intensity of the storm defined
  • The specific time frame during the storm when the damage occurred

Standard vs. Percentage

A standard deductible is a fixed amount that the policyholder must pay before insurance pays for any of the damage. In areas that are particularly susceptible to storm damage, however, a percentage deductible may be applied to minimize the risk for the insurance company. Percentage deductibles take the total value of the property and base the deductible on that amount. These deductibles can be as low as 1% of the total value of the property or as much as 5%, depending on the level of risk the location of the property poses.

No matter what kind of deductible your insurance company offers for your storm insurance, it is still a good policy to have. Your insurance agent can detail the benefits of purchasing a storm policy for your business.

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