How does deductible work with a total loss?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Dec 26, 2012

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Insurance Question from Madison, OH

Asked on 12/26/2012

How does deductible work with a total loss? I insured my boat for $3000 with a $500 deductible. I have spent $550 to find that the boat is a total loss. Will I be paid $3000 or $2500?

Answer given on December 30, 2012

If you had a boat that was insured, and you have a $500 deductible, the insurance company will reviewe the damages and determine if the damages exceed the value of the boat. If not, they will pay for the repairs, less the deductible.If the boat is considered a total loss, then the policy will determine if the insurance company will pay the $3,000, less your deductible, or if they will pay the actual cash value of the boat.If the policy is an “agreed amount” policy, then the insurance company will pay the $3,000 (again less the deductible). If it is not an agreed value policy then they will determine the current actual cash value of the boat and pay that amount less the deductible.You should leave it up to the insurance company to make these determinations. It sounds like you may have gotten estimates for the cost to repair the boat. If this was not authorized by the insurance company, they will probably not pay for those costs. If they agreed to obtaining the estimates, they will pay, but that amount will be a part of the $3,000 unless there is a clause ni the policy adding for such costs.

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