What is defined as the percentage deductible on a homeowner's insurance policy?

The percentage deductible on a homeowner's insurance policy refers to a set percentage of the policy value. This means that before the insurer pays any amount on a claim, the policyholder must cover the initial percentage relative to the total insured value of their property.

For example, if a homeowner has a policy with a value of $200,000 and a deductible of 2%, the deductible amount is $4,000. This structure is commonly used for certain types of claims, particularly in regions prone to natural disasters, where the cost of repairs may be significantly high.

This definition emphasizes the relationship between the deductible and the overall value of the policy, contrasting sharply with other options. A fixed dollar amount would not vary based on the policy's total value, a percentage of the claim amount wouldn’t be calculated in terms of the policy’s value, and having the deductible fixed for certain hazards only would not encompass the broad applicability intended in this definition. Thus, defining the deductible as a set percentage of the policy value accurately reflects how homeowners are expected to share in the risk based on the coverage they have selected.