Property Insurance Deductible – Who Pays?

Most insurance policies, including property insurance, health insurance, auto insurance, property insurance, small business insurance and home insurance, contain clauses pertaining to deductibles. A deductible may be defined as the amount you must pay upfront before the carriers pay you for the loss covered.

The next question many wonder is, “What is an insurance deductible as it relates to property insurance?” Residential Property insurance commonly has a straight line insurance deductible of a set amount or percentage of the value of insured property.

The straight insurance deductible applies to every separate loss, and thus the type used in all matters of personal insurance. To illustrate, assuming during the same year, you met with two or three different hail storms, then the deductible will apply separately for each of the storms.

The deductible is the co-pay or responsibility of the insured. Many times the insurance company’s loss statement refers to ‘less deductible applied’. This application of the deductible doesn’t mysteriously appear from the insurance company. This would be completely against the definition of what a deductible is.

The deductible is the portion deducted from the insurance company’s proceeds to restore the property to pre-storm condition. This portion or amount of deductible is the agreed upon amount between the insured and insurance company that the homeowner pays to the contractor. The replacement of damaged property is a shared expense between the homeowner and insurance company.

The insured’s annual premium is based upon the agreed upon out-of-pocket expense for the insured. The lower deductible constitutes a higher annual premium for the homeowner. The reciprocal is in effect which would mean that a lower annual premium would necessitate a higher deductible for each occurrence.

The fiduciary responsibility to pay the deductible is the homeowner’s. The department of regulatory agencies state that it illegal for the contractor to contribute to a homeowner’s deductible. However, many roofing companies contribute to the insured’s deductibles by shady sign credits, discounts, allowances and rebates. DORA defines this participation in partial payments as soft insurance fraud.

Texas state law on insurance fraud section 35.02 (a) A person who sells goods or services commits an offense if: (1) the person advertises or promises to provide the good or service and to pay:  (A) all or part of any applicable insurance deductible; or (B) a rebate in an amount equal to all or part of any applicable insurance deductible.                                                         

Historically insurance carriers didn’t bother going after offenders, those days are over. Today insurance companies are combating fraud on an increased level. With the increase of technology the ability to audit and prosecute offenders is improving.

Submitted by Jerry Fristoe, Integrity Roofing and Painting, 469-844-9289,

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