<\/p>\n
Yes, there are two types of deductibles: the \u201cPer Occurrence\u201d deductible and the \u201cPer Claim\u201d deductible.<\/p>\n
The Per Occurrence is the type that you think they all are. \u00a0It\u2019s the kind that appears on most home, property, and auto policies. \u00a0 It\u2019s easy to understand. \u00a0What is your deductible? \u00a0500? \u00a0That\u2019s the max you\u2019ll pay when something bad happens.<\/p>\n
The other is the Per Claim deductible and it applies only to liability policies, like General Liability or Professional Liability. \u00a0This one is a little more complex. \u00a0What it means is that you have a separate deductible that gets applied for each party that files a claim against you in a single covered occurrence.<\/p>\n
This is how it works: \u00a0Let\u2019s say ABC Construction has a General Liability policy with a $2500 deductible. \u00a0ABC Construction is installing the plumbing system in a condo building with 12 units. \u00a0ABC neglects to properly\u00a0seal the upstairs master bathroom shower drain in each of the units. \u00a0Six months after completing the job, each of the showers begin to leak water into the first floor ceiling below causing about $5000 of damage each. \u00a0All 12 condo unit owners file a claim on their condo owners policies for the water damage and after paying for the damage, each of the 12 insurance companies files a subrogation claim against ABC Construction.<\/p>\n
If ABC has a Per Occurrence deductible: \u00a0ABC\u2019s insurance company will pay $60,000 for the damage minus $2500, which ABC will have to pay.<\/p>\n
If ABC has a Per Claim deductible:\u00a0ABC\u2019s insurance company will pay $60,000 for the damage minus $30,000, which ABC will have to pay.<\/p>\n
What?!?!? \u00a0$30,000?!?!? \u00a0Where does this come from? \u00a0There were 12 different claims from 12 different insurance companies for that one occurrence. \u00a0Since ABC\u2019s deductible is Per Claim, ABC has to pay $2,500 per claim.<\/p>\n
The Per Claim deductible shows up frequently in general liability policies for contractors. \u00a0Insurance agents \u2013 knowing or unknowing \u2013 frequently sell policies with Per Claim deductibles because they\u2019re cheaper than those with Per Occurrence deductibles. \u00a0 In a competitive bid against for the lowest price, a Per Claim deductible helps. \u00a0When a prospective insurance buyer look at two identical polices and the only difference is the price and the tiny wording \u201cPer Claim\u201d or \u201cPer Occurrence\u201d next to the deductible amount, without a proper explanation, which do you think the prospective insurance buyer will take?<\/p>\n
We all want to save money, and accepting a higher level of risk through the different deductible options is a fine way to to so. \u00a0But unknowingly accepting a higher level of risk, only to find out at claim time that you\u2019ve done so is no way to operate a business. \u00a0So I beg: avoid insurance surprises and know what type of deductible you have!<\/p>\n","protected":false},"excerpt":{"rendered":"
One of the most well known\u00a0insurance concepts is the […]<\/p>\n","protected":false},"author":3,"featured_media":3449,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,20,17,7],"tags":[],"class_list":["post-3448","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-insurance","category-contractors","category-general-liability","category-liability-insurance"],"_links":{"self":[{"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/posts\/3448","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/comments?post=3448"}],"version-history":[{"count":1,"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/posts\/3448\/revisions"}],"predecessor-version":[{"id":44632,"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/posts\/3448\/revisions\/44632"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/media\/3449"}],"wp:attachment":[{"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/media?parent=3448"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/categories?post=3448"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finfrockweb.com\/gis\/wp-json\/wp\/v2\/tags?post=3448"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}