The deductible, as the name suggests, is the amount of the deductible. Refers to the amount agreed by the insurer and the insured in advance, the amount of loss is within the specified amount, the insured is responsible for the loss, and the insurer is not responsible for compensation. Because the deductible can eliminate many small claims, the cost of loss claims can be greatly reduced, which can reduce the operating costs of the insurance company and the premiums. That’s why deductible clauses are widely used in property, health, and auto insurance.
Absolute deductible means that the insured is responsible for a certain amount of loss before the insurer makes a payment. For example, if the contract stipulates that the absolute deductible is 200 yuan, then the insurer will not pay compensation if the loss is less than 200 yuan. If the loss exceeds 200 yuan, the insurer will pay compensation for the excess. Generally, this deductible applies to each loss.
Absolute deductible calculation formula: insurance claim amount = (total medical expenses – deductible) × compensation ratio
total deductible. This is to add up all the losses that fall within the scope of the insurance coverage during the insurance period. If the total losses are less than the total deductible, the insurer will not make any compensation. Once the total loss exceeds the total deductible, the insurer pays all excess losses. A calendar year total deductible is often used in health insurance, which accumulates all eligible medical expenses in the calendar year. Once the accumulated amount exceeds a certain amount, the insurer pays the medical insurance premiums according to the contract.
This is a deductible often used in marine insurance, and the deductible is expressed as two percentages or a certain amount. If the loss is lower than the specified proportion or amount, the insurer is not liable for compensation, but when the loss is higher than the specified proportion or amount, the insurer will pay for the entire loss. Relative deductibles are used in marine transport insurance because the shipper can expect at least some small loss due to bad weather, the vessel’s continued voyage, and the constant movement of the cargo, and because the property is occupied by the carrier, which does not have exaggerated losses motive.
Based on the disappearing deductible, the deductible decreases as the loss increases. This is actually no compensation for small losses and full compensation for large losses. For example, assuming that 500 yuan is the starting point for the disappearing deductible, the insurer will compensate 111% of the claim amount over 500 yuan; when the loss reaches a certain amount, all the deductible will disappear.
A waiting period is a disguised deductible in which the insurer does not pay insurance benefits for a specified period after the loss occurs. Waiting periods are commonly used in health insurance and incapacity income insurance.
Deductibles in marine insurance are specified in the marine insurance policy. In the event of a loss insurance liability, the insurer shall not be liable for compensation when part of the loss is within the deductible specified in the policy. In marine insurance, the deductible is specified in the insurance, but the deductible does not include claims for collision liability, salvage, total damage, and salvage. Claims for loss of separate voyages between two consecutive ports due to adverse weather shall be treated as an accident. The above provisions regarding deductibles do not apply to claims for a total loss of the vessel and reasonable expenses incurred exclusively for surveying the bottom of the vessel after the vessel has been grounded.
There is such a case of engineering insurance: the third party liability part of the policy stipulates that the absolute is RMB 5,000, and the insurance period is from May 1, 2000, to July 1, 2003. The project started in 1998. Due to other reasons, the project did not progress smoothly, and the project was suspended after the excavation of the foundation pit. In 1999, the new owner took over the management of the project and purchased construction.
On May 1, 2000, the new owner carried out blasting construction on the foundation pit after the construction plan was approved by the relevant parties. During the blasting process, the residents around the project reported to the owner that the houses were cracked by the earthquake. After residents, owners, and insurance companies jointly entrusted professional institutions to conduct on-site inspections, it was finally determined that there were three reasons for the cracking of residential houses. First, the houses were old-fashioned and in disrepair. Second, the precipitation during the excavation of the original foundation pit caused the underground subsidence of the houses. Third, engineering blasting vibration.
After entrusting a professional organization to calculate the maintenance cost of the private house, the maintenance cost is RMB 150,000. Residents, property owners, and insurers negotiate with each other. The residents themselves are responsible for 20% (30,000 yuan), and the owners are responsible for 80%. Since part of the loss was negotiated between the owner and the insurer before the policy started, the insurer was responsible for 60% and the owner was responsible for 40%. Solved, but the issue of deductibles is worth talking about.
The amount of compensation calculated by the owner is:
(150,000 – 30,000 – 5,000 ) × 60% = 69,000
The indemnity amount calculated by the insurer is:
(150,000 – 30,000) × 60% – 5,000 = 67,000
How to understand the problem of deductible?
Going back to the case above, how exactly the deductible is calculated depends on the wording in the policy. Like the above case, the insurer’s calculation is correct. In the policy contract, the deductible is of course the insurer’s deductible, because the insurer is liable for the loss of the insured. If the deductible specified in the policy is 5% of the loss or the loss is less than 5,000, the owner’s calculation also makes sense.
Plus, with full coverage, the deductible is easy to calculate. In the event of insufficient coverage, the deductible is also allocated in proportion to the insured amount and the insured value. The calculation of the deductible in the case of duplicate insurance may be more troublesome, but it can still be calculated. Although it is legal, it is not reasonable.
1) In property insurance, liability insurance, machine damage insurance, and engineering insurance, the deductible is mostly expressed in digital form, for example, the absolute deductible for each accident is XXX;
2) Most of the freight transportation insurance is expressed as a percentage, for example, the deductible is 0.3%;
3) In the case of hospitalization medical insurance and business interruption insurance, the deductible is 7 days;
4) In engineering insurance, the location range is also used as a deductible, which is not necessarily reflected in the amount, such as within 5 meters outside the red line, but it can also be understood as the scope of responsibility.
5) Mixed type, each insurance may have it, for example, the deductible for each accident is XXX, or 5% of the loss, whichever is higher.
Reason for adoption
1) The insured can afford it financially, and at the same time, the insurer can save a lot of labor for claim settlement;
2) It can prompt the insured to strengthen safety management and emphasize the control of small risks;
3) Due to the characteristics of the quality of the goods, it conforms to the laws of commercial transactions;
4) By determining the size of the deductible, the insured can adjust the insurance premium.