What is a Percentage Deductible?
A percentage deductible applies to perils that can cause catastrophic losses, such as hurricanes or earthquakes. These percentage deductibles are especially common in areas subject to a particular peril, such as hurricanes in coastal areas. In another example, if we assume your policy has a five percent hurricane deductible, the same $500,000 total limit, and sustains a $100,000 loss from a hurricane, then the claim payment would be $75,000. This is determined by subtracting the deductible, $25,000 (5% x $500,000) from the loss amount.
