On a single object a deductible is a subtraction and there is nothing to say about it. On a collection the question is not how much is taken off but HOW MANY TIMES, and the answer is not read in the figure: it is read in the word beside it. Per object, per event, per location, or as an annual aggregate. Those four words produce, on the same losses and with the same amount, results varying by a considerable factor, and it is the one parameter of the contract whose effect changes nature according to the scenario.
Take the per-object deductible on a mass loss, since it is the most frequent and least understood combination. Sixty damaged works means sixty subtractions. On modest pieces the deductible can absorb the entire damage to each, so that a perfectly real loss produces an indemnity close to zero across a whole part of the collection. A deductible calibrated with an isolated loss in mind therefore behaves the opposite way on the event the collection actually fears, and the collector discovers at that moment that the figure they negotiated was not the parameter they thought they were negotiating.
The per-event deductible produces the opposite effect and its own disappointment. A single subtraction on a mass loss, which everyone assumes to be the rule: that is favorable, and it is what a collector imagines having bought. But an ordinary year does not bring a mass loss, it brings four or five independent damages, a fall, a localized water escape, a knock in transit, and each bears the full deductible. The amount retained over the year can then exceed that of a single event, without any loss having looked serious.
The two structures therefore face in opposite directions: the per-object deductible protects badly against frequency, the per-event deductible protects badly against severity. Yet a collection's real profile is precisely the sum of both, many small damages and one possible catastrophic event. Neither structure suits on its own, which explains the existence of mixed forms, a per-object deductible capped per event, or a per-event deductible with an annual aggregate. Those forms are not broker refinements: they are the answer to a profile each simple form misses from one side.
Then comes the interaction with agreed value, which holds a rarely seen consequence. On a total loss the deductible comes off an agreed sum and the arithmetic is trivial. On partial damage it comes off restoration cost plus depreciation, and on modest damage it can consume the depreciation head entirely. In other words, the head the line invented to cover the irreparable is the first to vanish under the deductible, and it vanishes precisely on the most numerous losses. A collector who has read the depreciation module and negotiated a fine clause may never see it operate.
The deductible that cannot be negotiated must be added, the one belonging to the natural catastrophe regime. It is statutory, it cannot be bought down, and it applies on its own terms. A collection can therefore carry a negotiated deductible for most perils and an imposed one for the peril most likely to reach a basement store. The two figures live in the same file without ever meeting, and the second rewards no care taken over conservation, which was seen elsewhere and is verified here on the settlement sheet.
The useful test is simple and requires no expert: run the deductible over two trajectories before fixing it. An ordinary year, with four modest independent damages. And a single event reaching many objects. One and the same figure looks reasonable in both cases read on its own, and behaves very differently once made to run. It is the same gesture recommended for a reinsurance program, and for the same reason: what a contract covers is not read line by line, it is read along a path.
A collection of two hundred and forty works is insured at agreed value for 9 million euros, with a 5,000 euro deductible per object. The year unfolds as follows. In March a fall damages a single piece: restoration 22,000 euros, depreciation 9,000. In June a water escape in the store reaches forty-two works, thirty-one of which have combined restoration and depreciation between 3,000 and 6,000 euros, and eleven totalling 180,000 euros. The broker had presented the per-object deductible as more favorable than a 25,000 euro per-event deductible, on the ground that 5,000 is smaller than 25,000.
The broker's comparison is arithmetically true on one object and false on a collection, and that is exactly the slippage this module targets. On the March loss, the per-object deductible takes 5,000 euros off a 31,000 euro damage: the insured receives 26,000, against 6,000 had the deductible been 25,000 per event. The broker is right about that case, and it is the one they had in mind. On the June loss the structure reverses entirely. The thirty-one modest works each bear 5,000 euros, that is 155,000 euros of cumulative deductibles on damages between 3,000 and 6,000: most open no indemnity at all, and that whole half of the loss disappears. The other eleven bear 55,000 euros of deductibles on 180,000 of damage. In total, June costs about 200,000 euros in deductibles, where a 25,000 per-event deductible would have cost 25,000. Over the year, the deductible presented as the more favorable costs the insured nearly ten times the other. Two lessons follow. The first is that the figure was not the parameter to negotiate: the word beside it was. The second is that modest damages are where the deductible entirely consumes the depreciation head, which is to say precisely the cover the collector believed they had bought first.
- 01On a collection the question is not how much is taken off but how many times: per object, per event, per location or as an annual aggregate.
- 02The per-object deductible protects badly against frequency, the per-event one badly against severity, and a collection's profile is the sum of both.
- 03On modest damage the deductible entirely consumes the depreciation head, so the line's own cover vanishes on the most numerous losses.
- 04The statutory natural catastrophe deductible cannot be bought down and coexists with the negotiated one without ever meeting it.
- 05A deductible is set by running it over two trajectories, an ordinary year and a mass event, never by reading its amount on its own.