There is overage on this claim, but the deductible is still showing on the report. Why wasn't it absorbed?

Typically, insurance carriers calculate overages by taking the claim total and subtracting the sum of the policy limit and the deductible. This may be easier to understand with some examples.

Policy Limit$10,000$10,000$10,000$10,000$10,000
Claim Total$9,000$10,000$10,600$11,000$15,000
Less Deductible($1,000)($1,000)($1,000)($1,000)($1,000)
Overage($4,000)
Net Claim$8,000$9,000$9,600$10,000$10,000

In the case of the $10,600 claim total, even though the carrier is absorbing $600 of the deductible, the insured will still need to pay $1,000 out of pocket beyond the $9,600 payment from the carrier in order to become whole again.

In the case of the $11,000 claim total, even though the carrier is absorbing the full $1,000 deductible, the insured will still need to pay $1,000 out of pocket beyond the $10,000 payment from the carrier in order to become whole again.

In the case of the $15,000 claim total, even though the carrier is absorbing the full $1,000 deductible, the insured will need to pay $5,000 out of pocket beyond the $10,000 payment from the carrier in order to become whole again.

If you are unsure if the deductible is being absorbed or how much of the deductible is being absorbed, note the net claim amount with the deductible and then remove the deductible and compare the net claim values. For example, in the $10,600 example, without the deductible you’d see a $600 Overage amount and a Net Claim of $10,000. So by removing a $1,000 deductible the difference in net claims is only $400. To find out how much was absorbed, subtract the difference—$400—from the full deductible value and you can verify that $600 was absorbed. When the deductible is fully absorbed, the net claim amounts won’t be different from claim totals. When nothing was absorbed the difference will be exactly equal to the deductible. 


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