Understanding Deductibles

What Is a Deductible?

A deductible is the amount you agree to pay out of your own pocket before your insurance company begins covering the remaining costs of a claim. It is a fundamental concept in almost every type of insurance — health, property, auto, and business.

For example: if your home insurance policy has a $1,000 deductible and a storm causes $8,000 in damage, you pay the first $1,000 and your insurer covers the remaining $7,000.

How Deductibles Affect Your Premium

There is a direct relationship between your deductible and your premium — the amount you pay for your insurance policy:

Types of Deductibles

Fixed Dollar Deductible

The most common type — a set dollar amount you pay per claim. For example, a $500 deductible on your auto policy means you pay $500 every time you file a claim.

Percentage Deductible

Common in property insurance in hurricane-prone areas like Sint Maarten. Instead of a fixed dollar amount, you pay a percentage of the insured value. For example, a 2% deductible on a $300,000 home means you pay $6,000 before your insurer covers the rest.

Named Storm / Hurricane Deductible

In Sint Maarten, many property policies include a separate, higher deductible that applies specifically to damage caused by named tropical storms or hurricanes. This deductible is typically expressed as a percentage (e.g., 5–10% of the insured value) and is separate from the standard deductible.

It is critical to understand your hurricane deductible before hurricane season begins each year (June to November).

When Should You Choose a Higher Deductible?

A higher deductible may make sense if:

• You have sufficient savings to cover the deductible amount in an emergency
• You have a strong claims history and rarely file claims
• You want to reduce your monthly insurance costs
• You are insuring a property or vehicle with a lower risk profile