One of my Facebook friends recently posted the following status: "We have to pay back our $ 500 deductible Is this normal or should. -I look in a new insurance company? I do not think it's just because it's not like you can avoid hitting a deer. "After reading the comments it generated 50 post, I realized that the most people consider the insurance, as one person commented, boring.
Why do people think insurance is boring? is it because that it is confusing? I agree that insurance can be confusing, even for someone who works in the insurance industry. for the general public, franchises and how they work can be a difficult subject to get your head around.
Wikipedia defines a franchise as the amount of expenses that must be paid out of pocket before an insurer will pay the expenses. Most home and auto insurance policy deductibles are applied per incident (in the example of my friend, each time it hits a deer) because this type of insurance works on the assumption that you will not usually a loss. Really, how many of us expect to have an accident? Health insurance, on the other hand, is the assurance that you'll almost always use every year for an annual deductible is more logical. Could you imagine a deductible each time you visit the doctor?
Complicating the issue franchises more, your insurance policy may have several franchises that apply based on what caused your loss. For example, your homeowners policy may have a deductible "All Risks" of $ 1,000, Earthquake allowance of 5 percent (if your policy pays approval for coverage of the earthquake), and a wind deductible and hail 00 $. The cause of the loss that will dictate the franchise you have to pay. If your roof is damaged due to a hail storm, you would be subject to $ 00 wind and hail deductible, but if you have suffered a loss due to an earthquake, you would be responsible for a deductible totaling 5 percent of the amount of insurance you have covering your home. For example, if your home was insured for $ 100,000, you would be responsible for the first $ 5,000 $ loss.
A franchise is used as motivation for you to protect your property and prevent damage from occurring in the first place. Generally, the higher your deductible, your insurance premium down. Talk to your insurance agent to find out what your current deductible is, and discuss any questions you might have around the amount you will be responsible for loss or multiple losses throughout the year.
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