What’s a Deductible?

This is the amount that an owner (or a condo corporation) has to pay before the insurance kicks in. The deductible is generally negotiated between the insurer and the person who is insured and can be changed from year to year. The higher the deductible, the lower the insurance premium. (The premium is what a person pays each year to maintain the insurance.)

An insurance deductible for a suite may be $250 or $500 or even $1,000 or $2,000 depending on the amount of coverage that an owner wants.

Let’s take the example of a deductible of $500. If an owner incurs a $450 damage to her suite, this amount is lower than the deductible. This means that this owner has to pay for the damage and cannot claim anything from the insurance.

On the other hand, if the damage amounts to $550 and the deductible is $500, it would be advisable that the owner pays the $550 and not claim the small difference of $50, or any other small difference, so as to avoid having to report the damage to the insurer. Why? A claim may result in higher insurance costs a year or so after.

Policy holders should never report damage to their insurance company when they do not make a claim. Why? So as not to be seen as a risk to the insurance company and perhaps get a raise in premium the following year.