Deductible handling

Deductible handling in ClaimCenter

A deductible is an amount of money associated with a specific coverage that the insured must pay out of pocket for a loss before the coverage takes effect. The insurer provides payment only for the amount above and beyond the deductible. For example, suppose there is a personal auto policy with a collision coverage that has a deductible of $2000. The associated vehicle is involved in a collision, and the repairs cost $6000. The insured is responsible for paying the first $2000. The insurer pays the remaining $4000.

ClaimCenter provides functionality to handle deductibles during check creation. This includes keeping track of the total amount, the amount applied, and the amount remaining to be applied.

For more information on deductible handling, see the Application Guide.

Deductible handling in Cloud API

For Cloud API, deductible handling is part of check creation. A check set has one or more checks, and each check has one or more payments. A payment is comprised of one or more line items. For an exposure with a deductible, payments typically have at least two line items.

  • One or more line items that represent the total amount of the service or reimbursement.
    • These line items have a transaction amount, which is typically positive.
  • One line item that represents the deductible.
    • The line item has a transaction amount, which is typically negative.
    • The line item also has a lineCategory object with a code property set to deductible.

For example, suppose that you are writing the payload for a check the previous example in which a car needs $6000 of repairs, and there is a $2000 deductible. The lineItems array for the check would have two members:

  • The $6000 line item (for the repair service)
  • The -$2000 line item with a lineCategory.code of deductible (for the deductible)

The lineItems portion of the POST /check-sets payload would appear as follows:

            "lineItems": [
              {
                "transactionAmount": {
                  "amount": "6000.00",
                  "currency": "usd"
                }
              },
              {
                "transactionAmount": {
                  "amount": "-2000.00",
                  "currency": "usd"
                },
                "lineCategory": {
                  "code": "deductible"
                }
              }
            ]

This payload would result in a check whose amount was $4000.

The following is the complete payload for the check set described in the previous example.

POST /claim/v1/claims/cc:SzVCozO9dRQI_Ao1dBccV/check-sets

{
  "data": {
    "attributes": {
      "primaryCheckToWrite": {
        "paymentsToWrite": [
          {
            "lineItems": [
              {
                "transactionAmount": {
                  "amount": "6000.00",
                  "currency": "usd"
                }
              },
              {
                "transactionAmount": {
                  "amount": "-2000.00",
                  "currency": "usd"
                },
                "lineCategory": {
                  "code": "deductible"
                }
              }
            ],
            "paymentType": {
              "code": "final"
            },
            "reserveLine": {
              "costCategory": {
                "code": "body"
              },
              "costType": {
                "code": "claimcost"
              },
              "exposure": {
                  "id": "cc:SFaWbxZwJOCFh_UWbbC_8"
              },
              "reservingCurrency": {
                "code": "usd"
              }
            },
            "currency": {
              "code": "usd"
            }
          }
        ],
        "payees": [
          {
            "contact": {
              "id": "cc:SHLpehV4HdCDJSJhilgCA"
            },
            "payeeType": {
              "code": "insured"
            }
          }
        ],
        "paymentMethod": {
          "code": "eft"
        }
      }
    }
  }
}

Underpaying and overpaying deductibles

A deductible can be met through more than a single line item. (For example, a deductible of $500 could be met through two deductible line items of $250 each in two different check sets.) Also, a single deductible can apply to more than one exposure. Consequently, Cloud API does not perform validation to verify that the amount of the coverage's deductible matches the deductible line items in a check set.

As a result, it is possible to underpay or overpay a deductible. For example, suppose there is a personal auto policy with a collision coverage that has a deductible of $2000. The associated vehicle is involved in a collision, and the repairs cost $6000.

  • You could create a check set with a $6000 line item and a -$1000 deductible line item. The corresponding check would be for $5000. This would underpay the deductible and provide the payee with $1000 more than they were entitled to.
  • You could create a check set with a $6000 line item and a -$3000 deductible line item. The corresponding check would be for $4000. This would overpay the deductible and provide the payee with $1000 less than they were entitled to.

The responsibility of determining the correct amount of deductible to specify in a check set lies with the caller application.

Deductibles with positive amounts

It is possible to have a deductible line item with a positive amount. This can occur when an insurer has overcharged the deductible amount, and needs to give a refund to the insured.