One loss, two deductibles: Which one applies?
Coverage Q&A: In the event of an insurance claim, policy language is specific about when and how a deductible will apply.
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Question: We have a claim involving interior water damage from a roof leak. The policy is a homeowners’ with all risk coverage on the building. The policy has a $1,000 wind deductible and a $250 hazard deductible.
Inspection of the property revealed the interior water damage was from a leak around the flashing on the roof, and was not caused by wind.
Which deductible applies?
— Texas Subscriber
Answer: If wind was not involved in the leak, than the standard home deductible will apply. A wind deductible is applied only when the loss is caused by the wind. The deductible that applies is the one related to the immediate loss. The wind deductible applies only when the peril of windstorm or hail causes the loss. No other deductible applies in such an event.
See also: 15 preventable homeowners’ insurance claims and how to avoid them
Deciphering deductibles involving two policies at once
Question: When prorating damages under a homeowners’ policy due to the “other” insurance clause, is the loss still subject to a deductible? If so, should the deductible be prorated as well?
— Louisiana Subscriber
Answer: The policy language stipulates that the deductible applies unless otherwise noted; there is nothing in the other insurance section that indicates that the deductible would not apply. However, both policies are combining to provide coverage for one loss. While I was unable to find a case that fit this circumstance, the reasonable thing to do to be fair to the insured is to split the deductible between the two carriers. If one carrier’s proportion of the loss is 60 percent, then 60 percent of the combined deductibles should be applied to the insured.
It is not fair to the insured to apply both deductibles for one loss, and since the carriers are combining in order to provide coverage, they should also combine and split the deductibles.
See also:
Understanding debris removal coverage, costs and settlements