In tough times, not everyone has a pile of cash lying about to cover an unexpected loss. How much do you want to pay before the insurance company starts paying?
Example: You are doing good and own a lovely $400,000 home. One day, to your surprise, you find that water has decided to throw a pool party in your basement without your permission. Oh no, it’s a water backup loss! But fear not, you have water backup insurance coverage with a 1% deductible.
Here’s how this plays out in a simple way:
The 1% Rule: Your insurance says, “We’ll help, but remember the 1% rule!” This means you’re responsible for 1% of your home’s value before the insurance kicks in. In your case, 1% of $400,000 is $4,000. So, you’re like a bank for the first $4,000.
The Water Backup Bill: Let’s say repairing all the water damage and evicting the unwanted pool costs $10,000. You might gasp, but hold on!
Your Share vs. Insurance Share: You pay the first $4,000 (because of the 1% rule). The insurance company, wearing a superhero cape, swoops in to pay the remaining $6,000.
Note if you have a $1000 deductible then you would only pay $1000 and the insurance company would pay the remaining $9,000!
The End Result:
Your basement is saved, and your wallet is lighter. You’ve learned a valuable lesson about water backups and probably consider buying a lifejacket for your basement.
In short, with a 1% deductible on a $400,000 home, you cover the first $4,000 of any damage, and then your insurance covers the rest, up to the policy limit. It’s like going to a fancy restaurant and paying for the appetizer, while insurance pays for the main course and dessert.
For many people in Central Washington, it is easier to find $1000 to pay for a deductible rather than 1%. At Wenatchee Insurance, focus on usable and affordable.
Topics: Water Damage, Home Insurance, Wenatchee Insurance, Deductible, NCW, Central Washington, Chelan County, Sewer backup, Allstate, travelers, Hartford,
