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They sneak percentage-based deductibles into your homeowners insurance policy

percentage-based deductibles

It comes as no surprise to anyone living in the hurricane-prone Gulf Coast that many insurers are selling home insurance policies with percentage-based deductibles for storm damage instead of the traditional dollar-value deductibles used for other types of claims such as theft. Percentage-based deductible policies pass on more cost to homeowners when there’s a claim.

So read your renewal contract carefully. It could have a $1,000 deductible for fire losses, but up to a 25 percent deductible for hurricane damage in some high-risk areas, according to the website.

And that percentage can translate to significant dollars. A hurricane, or in some cases even a windstorm, could cost a homeowner much more out of pocket than a claim for fire damage with a $1,000 deductible. And an earthquake policy could carry yet a third deductible, which could differ from all the deductibles in the homeowners' policy for the same property.

Home insurance companies and regulators agree that percentage deductibles are necessary in order to provide coverage to storm-prone areas like Florida, but homeowners must keep a close watch on the insured value of their property whenever they make improvements. And percentage-based deductibles are sneaking into policies nationwide.

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