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If you have ever had to file a claim, you are probably familiar with the term deductible. A deductible is a small portion of your loss you are responsible to pay out of pocket. This helps to keep the cost of insurance affordable. Deductibles also offer some form of flexibility to buyers in order to lower monthly payments or to lower your total deductible cost in the case of filing a claim. Deductibles are quite easy to understand, but there are also different categories of deductibles.
Flat deductibles may sometimes be referred to as straight deductibles. These are commonly found in commercial property policies. A flat deductible is a specific amount that applies to each loss. It is then subtracted from the amount of a covered loss. The remaining amount is then paid by the insurer.
All policies have an All Other Peril “AOP” deductible. An AOP deductible applies to losses or claims that do not involve storms or wind and hail damage (fire, smoke, vehicle damage, aircraft damage, explosion, water damage caused by pipe breakage, etc.)
There are three types of deductibles when it comes to storm damage/claims:
“Wind/Hail Deductible”- this deductible would be applied to all wind or hail claims. For example, if you have any type of damage caused by wind or hail, this deductible would be applied. The AOP deductible would apply for all other types of claims.
“Named Storm Deductible”- this deductible would apply to any storm named by the National Hurricane Center. That means that if the storm reaches Tropical Storm status or greater and is given a name, this deductible would apply. The AOP deductible would be applied for all other types of claims.
“Hurricane Deductible”- this deductible is applied when a storm reaches Hurricane status (category 1 or greater). In order to reach hurricane status, a storm must have sustained winds of at least 74 miles per hour. The National Hurricane Center also decides when to make the call to increase the status to a hurricane based on the intensity. The AOP deductible would apply for any claims that are not caused by a hurricane.
Original Source: https://blog.universaldirect.com/blog/how-deductibles-work