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What Does a Loss Below Deductible Really Mean?

Your homeowners insurance is designed to help you and your family recover from damage to your home and assets. The premise is easy enough to understand, but things can get confusing when you actually need to make a claim. If you aren’t aware of how your policy’s deductible works, you might be surprised to hear that some claims can be marked as a “loss below deductible.” Let’s break down what this actually means.

How Your Insurance Deductible Works:

There are two types of payments with any homeowners insurance policy. The first one is called your premium. That’s the monthly payment you make to keep your policy active. The second payment only comes into play when you have an insurance claim. That’s called your deductible. It’s the amount you’ve agreed to pay, per your policy, to help with your repair or replacement needs. It doesn’t really matter what the event was—you still need to pay that amount before your insurance can kick in to cover the other costs.

Comparing your current policy’s deductible with other options can help you make sure you’re getting the best deal on your homeowners insurance from year to year. You just have to do a little math. For example, a flat $1,000 homeowners insurance deductible might look a lot different than a percentage amount. If your home is insured for $200,000 and your deductible is 2% of that, you’ll be looking at a $4,000 bill. That’s why you need to run the numbers. Do you want to have a lower monthly premium, but a higher deductible? Or is it worth it to spend a little more throughout the year for a lower deductible?

Figuring out this information ahead of time can help you plan for the unexpected. If you have a somewhat higher deductible, then you might be interested in setting aside some funds specifically for an emergency. That way, you’ll be better prepared to navigate the insurance process and get things back on track.

Why Your Claim Might Be a Loss Below Deductible:

It can be discouraging when your claim comes back with a loss below deductible statement. At first, you might think your claim has been denied altogether. But that’s not exactly the case. A loss below deductible simply means that the cost of the damage or loss—whether it’s from a tree limb falling on your garage or someone stealing your television—is less than the amount you would need to pay for your deductible.

Looking at our earlier example, if you have a $1,000 deductible but your event only costs $750, then your insurance can’t be expected to cover the expense. It’s only when your loss is more than your deductible (and you’ve met the payment for your deductible) that your insurance policy will start to pay out.

Of course, sometimes the insurance company or your insurance adjuster can get the details wrong. It’s possible that your claim was processed as a loss below deductible, when in fact, it isn’t. That’s why it’s so important to follow-up on each document. Every piece of feedback you receive while working through your homeowners insurance claim needs to be carefully reviewed. Mistakes happen, so the more you know about how the process works, the more likely you’ll be to get the outcome you want with all of the money you’re rightly owed.

Got Other Homeowners Insurance Questions?

The insurance world can get complicated fast, but hopefully this background information helps remove some of the headaches. And if you want some more tips about the process, you can always check out Insurance Claim Secrets. This down-to-earth guidebook walks homeowners through all of the basics with their insurance policies. From how to review your policy to how to handle your insurance claim, we’ve got all the insights that matter most. Yes—even when you hear your claim has been reviewed as a loss below deductible.

Hopefully you’ll feel comfortable reaching out to your insurance agent too. You don’t have to work through your claim all on your own. The more knowledge you have about the claims process and what steps to take, the smoother things can go.