ISU Sander Jacobs

Personal Lines

How To Determine the Deductible on your Homeowners' Policy

Personal LinesWilfred Ovid OcampoComment
pexels-photo-259588.jpeg

 

When it comes to homeowners insurance, don’t just pick a number

While every homeowner will understand that insurance keeps their home and belongings to stay protected, throughout perils and lengthy lawsuits, many overlook the importance of the deductible. Within your home insurance is a deductible – the amount “deducted” from an insured loss claim payment. When filing a claim to repair your home or replace your personal belongings, the deductible would come out of your pocket.

In short, when you’re selecting your deductible, it’s important to take into consideration your financial picture. If you set your deductible to $1,000, but don’t have that cash on hand when you file a claim, you’ll be left in a less-than-ideal situation.

Deductible Options

There are generally two types of deductibles:

  • Dollar-Amount: For example, $500 “dollar deductible”. If your claim were for $5,000, your insurance company would take care of $4,500 while you paid the remaining $500.
     
  • Percentage Based: These are based on a percentage of your home’s insured value. If your home is insured for $100,000 and your insurance policy has a 2 percent deductible, $2,000 would be deducted from the amount you are reimbursed on a claim. For example, if the insurance loss is $10,000, you would be paid $8,000.

Financial Considerations

When selecting a deductible, you’re balancing the short-term cost that you can afford (your deductible) and the long-term cost of your policy (your premiums). The more you can afford in the short-term, the more you’ll save in the long-term - a higher deductible means lower monthly premiums. Before selecting a high deductible to save a couple of dollars, consider if you can afford this cost out-of-pocket in the event of an accident.

Find out how you can determine the right deductible for your home visiting ISU Sander, Jacobs, Cassayre Insurance Services. Our agency can pair you to the right coverage for your needs and budget.