Use dotted terms for definitions. You can also browse the glossary.
Before you decide
- Convert percentage deductibles into dollars using the policy basis.
- Test several properties affected by one event.
- Premium savings do not make a larger retained loss affordable.
Start with available cash
Separate operating cash, security deposits held for tenants, planned capital work and genuinely available emergency reserves. A deductible choice should reflect the money you can deploy while repairs and lost income compete for funds. Do not treat restricted deposits or an unapproved credit line as an insurance reserve.
TDI explains flat and percentage deductibles. The percentage needs its contractual dollar basis: it is not necessarily a percentage of the repair bill. Ask about peril-specific deductibles and minimums before comparing options.
Worked comparison
Illustrative offers for otherwise identical coverage: A costs $2,400 annually with a $2,500 deductible; B costs $2,100 with a $7,500 deductible. B saves $300 per year but retains another $5,000 for a deductible-sized covered event. $5,000 ÷ $300 is about 16.7 years of simple premium savings.
That ratio is a cash tradeoff, not an estimated claim frequency or actuarial break-even forecast. It ignores changing premiums, investment returns, multiple events and losses below either deductible. Use actual offers rather than these sample prices.
Test the event definition
| Term | What to check |
|---|---|
| Per location | Could each building attract its own deductible? |
| Per occurrence | How are event duration and multiple locations defined? |
| Wind or named storm | Does a percentage, minimum or special trigger replace the base deductible? |
| Water or flood | Is this a separate policy with a separate retention? |
Write a reserve decision
Suppose three buildings each carry a $6,000 applicable deductible and one event reaches all three under separate per-building treatment. The illustrative deductible exposure is $18,000 before uninsured work or income gaps. Confirm that treatment in the form; a shared-event assumption can be wrong.
Document the selected option, available reserve, other simultaneous cash needs and why the difference is sustainable. Re-run the comparison when limits increase, a new peril deductible appears or you acquire another nearby building.
Sources & scope
- Texas Department of Insurance: What to know about deductibles
Flat and percentage deductible examples, updated October 14, 2024. Read the actual contractual basis.
Sources checked October 24, 2026. General descriptions do not replace the policy, endorsements, declarations or an insurer’s coverage determination. Examples are hypothetical unless explicitly identified otherwise.
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