Split Deductible
What Does Split Deductible Mean?
A split deductible is a type of deductible in an insurance policy that is paid differently depending on the specific peril or loss. This form of deductible payment is not mandatory for all insurance policies but is instead selected by the policyholder.
Insuranceopedia Explains Split Deductible
Split deductibles are easier to understand when compared to the alternatives: flat amount deductibles and percentage deductibles.
A flat amount deductible specifies a fixed amount that the policyholder must pay before the insurance coverage applies. For instance, if the policy requires a $100 deductible, the policyholder pays $100 out of pocket for a loss before the insurer begins to cover the remaining costs.
A percentage deductible, on the other hand, is calculated as a specified percentage of the loss. For example, if the loss is $1,000 and the deductible is 1%, the policyholder must pay $10 before the insurance coverage takes effect.
A split deductible combines these two approaches, applying different types of deductibles based on the cause of the loss. For example, damage caused by fire might require a flat amount deductible, whereas damage caused by vandalism could involve a percentage deductible based on the total loss.
