Split Deductible

Updated: 11 March 2024

What Does Split Deductible Mean?

A split deductible is a deductible on an insurance policy that is paid out differently based on the specific peril or loss. This type of deductible payment is not mandatory for certain types of insurance policies but is, instead, chosen by the policyholder.

Insuranceopedia Explains Split Deductible

It's easier to understand split deductibles by comparing them to the alternatives: the flat amount and the percentage deductible.

The flat amount is a deductible that specifies the amount the policyholder has to pay for a deductible. If the policy states that $100 has to be paid for a loss, the policyholder pays $100 out of their own pocket before the insurance company starts covering the loss.

The percentage deductible is the specified percentage of the loss that a policyholder pays as a deductible. If the loss is $1,000 and the percentage is 1%, then a $10 deductible has to be paid before the insurance coverage kicks in.

The split deductible can be a combination of these two, applied to specific causes of loss. For example, if the insured property is damaged by fire, the deductible might be a flat amount, while if it is damaged by vandalism, the deductible might instead be a percentage of the total loss.

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