Nearly all insurance policies including property insurance, health insurance, and auto insurance contain clauses in the policy language pertaining to deductibles. It is the standard in the industry.
Simply put, an insurance deductible is the amount you must pay out of pocket in addition to what the insurance company is paying. Health insurance deductibles have to be met before the insurance providers will pay your medical bills. If you have ever been to a doctor, you have experienced this. Property insurance claims work similarly.
What is an insurance deductible as it relates to property insurance claims?
When a property insurance claim is filed, the insurance claims adjuster will inspect the damage and determine the amount the insurance company will pay to restore your property to its original condition prior to the incident causing the damages.
The adjuster will then deduct the amount of the preset deductible from the first payment they send you.
The adjuster will also deduct the depreciated amount of the roof (and other damaged property) from the first payment. This is considered the net claim. There is generally a second payment issued after the work is completed to recover the depreciation that was withheld. It is important to note that while the depreciation is recoverable in the form of a second insurance payment, the deductible is not. It is always the responsibility of the insured to pay this amount.
How much is a deductible?
That depends on you! The vast majority of deductibles for property insurance in Colorado are set at $1000. This amount is selected by you when you meet with your insurance agent to renew or set up your new policy. You actually control how much the deductible will be. Generally speaking, the higher the deductible, the lower the premiums will be. You decide how much you want to spend, or can afford, on your premiums and choose the deductible option that works with your budget. We have seen deductibles as small as $250 or as high as $10,000.
Increasingly we are seeing deductibles that are based on a percentage of the value of the home. In areas around the coast, this is standard, but it is becoming more common in Colorado as well. Instead of a set rate of $1000, you can select a 1% or 2% deductible. For example, if your home is insured at $300,000, a 1% deductible would be $3,000 and a 2% deductible would be $6,000.
You have to weigh the savings on premiums against the possibility of filing a claim and incurring the deductible to see which is a better option for you. Your insurance agent can help you work through the specific options for your policy. Only you can determine what the right deductible is for you based on the value of your home and budget.
The deductible is the co-pay, or responsibility of the insured. Many times the insurance company’s claim summary indicates “less deductible applied.” This does not mean that the deductible is reapplied (or added back in) in another part of the claim. It is deducted from the insurance company’s payments, thus the term deductible.
The replacement and repair of damaged property is a shared expense between the homeowner and insurance company.
Any way you look at it, the responsibility to pay the deductible is the homeowner’s. Colorado Legislature clearly, and in great detail, states that it is illegal for a roofing contractor to contribute to a homeowner’s deductible. (SENATE BILL 38) However, some roofing companies continue to illegally contribute to their unsuspecting clients’ deductibles with sign credits, discounts and rebates, all of which are specified as illegal and punishable by law. Integrity Roofing and Painting does not participate in this illegal practice.
It is Integrity Roofing and Painting, LLC company policy that all clients must pay their deductible. We will invest that money into installing a high quality roof system. It is our intent to be upfront and truthful with each potential client. We will be unapologetically ethical and uncompromising in our integrity with the insurance company and with our service to our clients.