What is the deductible on the optional HO earthquake endorsement based on?

The deductible on the optional Homeowners (HO) earthquake endorsement is determined based on a percentage of the policy limit. This approach means that the deductible amount increases in correlation with the overall coverage limit of the policy. Typically, this percentage may range from 10% to 25%, although the specific percentage can vary based on the insurance provider's policies and the terms agreed upon when purchasing coverage.

This method of having a percentage-based deductible reflects the higher risk associated with earthquakes, making it a more equitable approach for both the insurer and the insured. As a result, the deductible adjusts relative to the overall value of the property covered, ensuring that it scales with the potential loss or damage that might occur due to an earthquake.

Choosing a fixed amount or flat fee for the deductible would not take into account the total policy limits, resulting in a potentially inconsistent relationship between the deductible and the coverage provided. Similarly, basing it solely on the total value of personal property would not align with the broader scope of the homeowners policy limits, which include more than just personal property. In contrast, the percentage-based deductible effectively aligns the risk management strategies of the insurer with the coverage needs of the policyholder.