For those who are asked the question about their property deductible, most would laugh.

“Me? Of course I know there is a deductible. What kind of a fool do you take me for anyway?”

Well, be surprised. Many people simply assume that they know what type of deductible comes with their property policy. In states like Texas, however, where natural storms are common, the amount associated with a deductible is not a given for those who live out of state.

Sample question: do you know the answer?

Q: You don’t live in Texas, but you own property there. You have a five percent deductible associated with your $ 500,000 coverage on your building in Austin, Texas. Your building suffers $ 100,000 worth of hurricane damage. How would you explain your 5% deductible in relation to the amount the insurance company will reward you?

1. Does the insurance company reimburse you for $ 95,000 (five percent of your total claim)?

2. Or do you reimburse you $ 75,000 (five percent of the total property value)?

If the n. 1 was his answer, he failed the exam! The correct answer would be # 2!
Unlike most states, in Texas, the five percent deductible refers to the total value of the property, also known as TIV.

Those who live in Austin, Dallas, Houston, San Antonio, Irving, or anywhere else in Texas where Mother Nature wreaks cyclonic havoc are much more familiar with deductibles and their relevance to total property value. That’s why the average Texan would probably have chosen option # 2. Due to the widespread damage and loss resulting from violent storms, insurance companies always set high deductibles so that the risk of liability for damages is pooled together with the homeowners. of property policies.

What about the biggest loss scenario?

Example of construction deductible in case of wind damage:

• Your building is valued at $ 5 million
• There is a five percent deductible
• Not covered for $ 250,000!

Example of an apartment complex deductible that incorporates 3 buildings in case of wind damage:

• Your property incorporates 4 stripes of ten places of residence, each valued at five hundred thousand dollars, which equates to a total of $ 2 million.
• 1 strip is destroyed by the storm and there is a five percent deductible
• Not covered for $ 100,000!

Moral of the story

If there is one thing a property owner can learn from the above, it is to learn about the contents of his policy, as well as use the services of a qualified and reputable independent insurance agency to guide him in the right direction.