Joined: 04/03/2018 11:51 AM EDT
Location: American Fork, UT
Hi Home Inspection Forum Readers!
When most insurance policies are pretty much tomes, it's tough to catch all the details. And those details can make a huge difference. In our latest article, we talk about one of the deductible discounts you can find in some home inspection insurance policies and how it works so you don't miss out on potential savings.
How to make half of your insurance deductible disappear
From our decade of claims data, we know that the majority of home inspectors receive at least one claim in their career. And, when they do, it never feels great?particularly when that claim is meritless as about 80 percent of home inspection claims are.
In his recent article, home inspector Randy Sipe described the feeling of a first claim as "the most emotional roller coaster ride of your professional life," primarily due to the financial worries associated with claims. As Sipe pointed out, the first step toward peace of mind is carrying errors and omissions (E&O) and general liability (GL) insurance. But your protection doesn't have to stop there. Some insurance providers provide deductible discounts to home inspectors based on how infrequently they receive claims and on how quickly they report allegations. In Part 1 of our series, we go over how you can make half of your insurance deductible disappear.
A diminishing deductible endorsement?also referred to as a reducing, depreciating, or disappearing deductible?rewards you for your consecutive years with your current insurance provider and without claims. Below, we address some key characteristics:
Some diminishing deductible endorsements only affect your E&O coverage.
In home inspection insurance, most policies come with separate E&O and general liability deductibles. Often, home inspectors have the opportunity to choose the E&O deductible that's right for them. (InspectorPro offers E&O deductibles of $1,500, $2,500, and $5,000.) On the other hand, insurance carriers typically determine the general liability deductible amount. (Typically, InspectorPro's GL deductibles are $1,000.)
Since many carriers standardize most GL deductibles for home inspectors based on their own risk calculations, some diminishing deductibles only affect your E&O coverage, including ours. In order to confirm which deductible(s) your endorsement affects, read the endorsement form in your insurance policy.
Most diminishing deductible endorsements have a standard and a maximum reduction.
Is it possible to reduce your deductible to $0? Or to reduce your deductible by a larger percentage one year than the next? Not with a diminishing deductible endorsement. Most (if not, all) diminishing deductible endorsements have a standard and a maximum reduction amount.
With InspectorPro, for each consecutive policy period that you do not have a claim, your E&O deductible will be reduced by 10 percent subject to a maximum reduction of 50 percent. So, each of your first five consecutive years are subject to a 10 percent reduction. And, even if you go 10 years consecutive years without a claim, the most your deductible will reduce is 50 percent.
The following graph illustrates your potential diminishing deductibles based on number of consecutive years without claims and E&O deductible:
Keep in mind that different insurance companies can offer different decreases. So, be sure to review your insurance policy or consult your insurance broker to determine a) if your current coverage offers a diminishing deductible and b) how much the deductible can reduce each year.
This message was edited 1 time. Last update was at 05/20/2019 06:30 PM EDT