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Cortland, NY 13045

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Understanding the 80/20 Rule of Homeowners Insurance

Homeowners insurance is a must for anyone who owns a home in New York or Pennsylvania.  One of the most important concepts to understand is the 80/20 rule—a basic principle that applies to all homeowners’ insurance policies. So, what is the 80/20 rule in homeowners insurance? AW Burchell Agency Inc. is here to assist with all your queries.

What Is the 80/20 Rule?

The 80/20 rule is a basic concept that applies to all homeowners’ insurance policies. It states that insurers will only pay out up to 80% of a claim’s cost after it has been approved. This means that if your claim costs $10,000, you will only be able to receive $8,000 from your insurer. You must pay the remaining 20% of your claim.

How Does It Work?

The easiest way to understand how the 80/20 rule works is by looking at an example. Say you have an insured event, and the total claim amount comes out to $10,000. Your insurer approves the claim, but since it is subject to the 80/20 rule, they will only cover up to $8,000 worth of repairs and replacements. You are then responsible for covering the remaining $2,000 out-of-pocket or through other sources, such as savings or investments, if you don’t have enough cash on hand or available credit on your credit cards.

 What Are Some Exceptions?

The good news is that there are some exceptions when it comes to the 80/20 rule in homeowners’ insurance policies in New York and Pennsylvania. Additionally, some insurers will provide coverage for 100% of certain types of claims, such as liability claims.

Give Us A Call

In short, the 80/20 rule states that insurers will pay up to 80% of approved claims while leaving 20% to homeowners. Still have questions? Contact AW Burchell Agency Inc. today.

Partner Carriers

  • Allstate
  • Amercian Modern
  • Bristol West
  • Broome Co-Operative
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  • dryden mutual
  • Fingerlakes Fire & Casualty
  • Foremost
  • Hagerty
  • JC Taylor
  • Main Street America
  • Mercury
  • National General
  • Nationwide
  • NYCM
  • Progressive
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  • USLI
  • Wayne Co op