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Understanding the role, a deductible plays when insuring a car or a home is an important part of getting the most out of your Florida insurance policy.

A deductible is basically the amount “deducted” from an insured covered loss. Deductibles have been an integral part of the insurance contract for many years and represent a sharing of the risk between the Florida insurance company and the policyholder. When repairing your home or replacing personal possessions, the amount of the deductible would come out of your own pocket.

A deductible can be either a specific dollar amount or, a percentage of the total amount of insurance on a policy. Generally speaking, the larger the deductible, the less a consumer pays in premiums for an insurance policy. Deductible amounts can be found on the declarations (or front) page of standard Florida homeowners policies.

Here is how it works: if you have a $500 “dollar deductible,” that $500 would be deducted from your claim. So, if your insurance company has determined that you have an insured covered loss that is worth $10,000, you would receive a claims check for $9,500.

Percentage deductibles are calculated differently. They are based on a percentage of the home’s insured value. So if your house is insured for $100,000 and your insurance policy has a 2 percent deductible, $2,000 would be deducted from the amount you are reimbursed on a claim. In the event of the $10,000 insurance covered loss, you would be paid $8,000.

Deductibles in many parts of the country have been going up. In hurricane prone states, where there is a greater risk of a major catastrophe, special deductibles may apply for Florida homeowners insurance claims when the cause of damage is attributable to a hurricane. These deductibles are generally higher and may take the form of a percentage of the policy limits.

One of the best ways to save money on a Florida homeowners policy is to raise the insurance deductible. However, prior to increasing your deductible, make sure your amount will be feasible for you in an event of a catastrophe. Insurance is regulated by the state. Insurance companies must abide by strict state laws, this also applies to the way deductibles are incorporated into the language of a policy, and how they are implemented.