How does a deductible work?

We’ve all been there. Insurance can be confusing, and they never seem to make it easy to understand. You’ve got coverage but you somehow owe money too? “But, I have insurance,” you may be thinking to yourself, “what gives?” We explain a little bit today on how a deductible works, in regards to your insurance, and give you a general overview of the most commonly asked questions that we get.

A deductible is simply the amount of money that you and your insurance have agreed upon that you will have to pay out of pocket during each year of policy coverage. For the purposes of this explanation, let’s say you have a $500 deductible, and you have not made any claims at all this year:

You have a burst pipe (and it would be a covered claim), therefore, you call out IRS and you file a claim afterward. Afterward, IRS sends you an invoice that totals $2,500. When your insurance company pays out for this covered claim, they will send you the amount of the invoice, minus the amount of your deductible. In this case, the check your insurance would send you in order to pay us would be $2,000. As the policy holder, the other $500 is your responsibility to cover.

Although there are also percentage-based deductibles, the majority of policy holders in the United States deal with dollar-based deductibles. However, the principles remain the same for how your insurance company would pay you out for a claim.

When working with IRS, be rest assured that we have your best interests in mind. Our knowledgeable staff can help you determine if filing a claim is even necessary at all, and, in either case, we help walk you through the process step-by-step to make it as easy and hassle-free for you as possible.