Texas character Insurance 101 – Do You Know Your Policy’s Deductible?

For those posed with the question about their character deductible, most would laugh it off.

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

Well, be surprised. Many folks just assume they know what kind of deductible comes along with their character policy. In states like Texas, however, where character’s storms are shared, the amount associated with a deductible is not a given for those living out of state.

Example Question – Do you know the answer?

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

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

2. Or does it reimburse you for $75,000 (five percent of the character’s total value)

If #1 was your answer, you flunked the test! The right response would be #2!

Unlike most states, in Texas, the five percent deductible refers to the character’s total value, also known as TIV.

Those living in Austin, Dallas, Houston, San Antonio, Irving or any other identify in Texas where Mother character wreaks her cyclone havoc are far more familiar with deductibles and pertinence to the total value of owned character. That is why the average Texan would probably have chosen option #2. Because of extensive damage and losses as a consequence of violent storms, the insurance companies always affix high deductibles in order for damage liability risk to be pooled together with the character policy owners.

What about the scenario of bigger losses?

Example of building deductible in the event of wind damage:

• Your building is valued at $5 million

• There is a five percent deductible

• You are not covered for $250,000!

Example of apartment complicate deductible incorporating 3 buildings in the event of wind damage:

• Your character incorporates 4 strips of ten places of residence, each valued at five hundred thousand dollars, equaling a total of $2 million

• 1 strip is destroyed from the storm and there is a five percent deductible

• You are not covered for $100,000!

Moral of the Story

If there’s anything a character owner can learn from the above is to get educated about the contents of your policy in addition as to utilize the sets of a qualified, reputable independent insurance agency that will steer you in the right direction.

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