What Increases the Deductible on an Insurance Policy?
- Standard property insurance deductibles apply one time per claim and cost you a fixed, predetermined amount of money. For example, when you purchase an auto policy with a $500 deductible, you pay the first $500 of your vehicle's repairs before the insurer pays for the rest. If you have a second accident, you pay another $500. Homeowner's insurance generally works the same way. Only you can change the deductible amount on your policy by calling your agent and requesting the change. Higher deductibles result in lower premiums, and vice versa. Once you suffer a loss, you can't change the deductible for the claim you file for that loss.
- Health insurance policies can cover individuals or several members of a family on a single policy. Certain policies have two sets of deductibles: one for the individual and another for the family. The family deductible is often twice that of the individual. Depending on the wording of your policy, you must meet a family deductible in one of two ways: Either each person must satisfy his individual deductible before the insurer pays any benefits, or the family as a whole must satisfy the larger family deductible first. For example, your family policy carries a $2,000 deductible. Either you must pay $1,000 before you receive any benefits, and your spouse must do the same, or both of you in any combination must pay the full $2,000 before the insurer contributes.
- Health insurance has other ways of charging you money besides the deductible. A copay is a flat dollar amount you must pay toward specific medical services. For example, you might have a $25 copay for each doctor visit. The coinsurance clause is a fixed percentage of all medical costs you must pay after you satisfy the deductible. This means you may have to pay your $1,000 deductible and 20 percent of additional costs. Although copay and coinsurance monies are technically not part of the deductible, they all contribute to your out-of-pocket costs when you file a health insurance claim.
- Homeowner's insurance in many coastal areas of the United States now carry percentage-based deductibles in the wake of 2005's Hurricane Katrina. Rather than the traditional fixed-dollar-amount deductible, new policies and many renewals now require you to pay a certain percentage of the damages, typically 1 or 2 percent. This may drastically increase the amount of money you pay as a deductible. Additionally, insurers in certain areas now charge a separate deductible for wind damage. If you have a policy of this type, you may have to pay both flat-fee and percentage-based deductibles for certain types of loss.
