What Are Disappearing Deductibles?

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In insurance terminology a "deductible" is the amount of money you pay. Learn about disappearing deductibles with help from a business consultant in this free video clip.

Part of the Video Series: Finance & Business Advice
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Video Transcript

Hi, my name is Alexis Guerreros, I'm a business consultant. Today I'm going to talk to you about disappearing deductibles. Now this comes up in insurance all the time. Typically it's either property or car insurance. Now when property insurance, the way they handle it is your deductible is the amount you pay. So you owe if something happens. Property insurance sometimes will be counted as a percentage. So say your house suffered 1000 dollars worth of damage, and you owe ten percent, well now you have to pay 100 dollars. Now the way a disappearing deductible works is as the value of the damage goes up, the debt percentage that you pay starts to disappear. And typically over a certain number, it's actually gone completely. So you don't owe anything. Now the way car insurance works is over time. So say you've gone three years without any insurance claim, the amount of deductible you would owe, let's say your policy claims that you owe 100 dollars for every claim, it would start to go down. Some popular insurances now actually deduct 50 dollars for every three years you go without any insurance claims or any accidents, or anything wrong. So something to keep in mind when you're looking at your insurance policy, if you have a disappearing deductible within your property, make sure that the value equals the amount of money that you may owe. And if you have a car insurance, well drive safely. That deductible may just completely go away. Good luck.


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