Every property owner wants a low-deductible insurance policy
But how do you maintain a low-deductible when DFW’s hail-prone weather causes insurers to place 1%, 2%, even 5% deductibles on property policies?
One word – NEGOTIATE
Carriers don’t want to pick up the tab on every hail-storm that blows in, and you have to argue them down from high deductibles they use to protect themselves.
There are 3 valuable phrases that can help you negotiate better terms.
”Flat”, “Per Location”, and “Per Building”
If the deductible section on your policy says “$25,000 flat deductible”, that means you pay $25k of the claim, and the insurance company pays the rest.
|Per Location Deductible
Let’s say that, within your property portfolio, you have 2 separate locations in DFW…Dallas and Richardson. A major hailstorm hits the metroplex damaging both areas. The deductible section on your policy says “$25,000 per location deductible”. That means you pay $25k for claim recovery at the Dallas location, and another $25k for recovery at the Richardson location. Total deductible is $50k.
|Per Building Deductible
Let’s say the deductible section on your policy says “$25,000 Per Building Deductible”. The two locations each have 8 buildings. The storm damages 2 building at the Dallas location and 3 at the Richardson location. In this scenario, you’re paying 5 $25k deductibles (total $125k) prior to claim recovery.
Dialogue with your Underwriter
You or your agent should at least argue for ‘per location’ deductible wording. Most underwriters would be reluctant to hand over ‘flat’ deductible wording w/out some premium consideration, but a per-location deductible is a reasonable request that would be a vast improvement from ‘per building’.
Check your policy for deductible details. Specifically, the first several pages, the dec pages, will outline coverage essentials like this.
For most policy-holders, the ‘deductible’ is the 2nd most important thing, right behind ‘premium’.
The key to a low premium is understanding ‘rate’…