Are You Paying the Right Insurance Deductible for Your Home?
Lowering monthly expenses is always a homeowner’s top priority. After watching your water consumption and turning off all the lights, consider reviewing your homeowner’s insurance to not only find savings but an added sense of financial balance.
Your instincts might tell you to raise the deductible to lower your annual premium. But with the average homeowner’s deductible around $500, you have to know if you can readily absorb a cost any higher than that. To determine the deductible that’s right for you, think through these questions:
How Much Can I Handle?
New homeowners need time to recover from purchasing their first home. Keeping your deductible low might benefit you the most right now, so you don’t have the stress of a costly, unexpected repair. You can always change your policy later.
If you’re a more established homeowner, you probably have a better idea of the coverage you need and the claims you’ll make. You’re also more likely to have sufficient savings to afford a higher deductible with the benefits of a lower premium. The Insurance Information Institute explains you can save 20% by raising your deductible from $500 to $1,000. Even though you’re paying more out of pocket if you file a claim, most homeowners only make a claim once every 8 to 10 years.
Do I Have the Right Type of Deductible?
Flat Rate Deductible: Most homeowner’s insurance policies offer a flat rate deductible, which usually starts at $250 and can go up to $5,000. The benefit of a flat rate is it never changes unless you change the coverage.
Percentage Deductible: In some instances, the deductible is a percentage of the home’s insured valued. This is not market value but the current cost of rebuilding your home. Percentages can range from 1-5% of the insured value. Because it’s based on current value, this deductible may vary year to year.
Do I Live in a High-Cost or High-Risk Area?
The insured value of your home is dependent on location, location, location. Homes in vulnerable-to-disaster areas should expect to pay higher premiums. You may also have to pay multiple premiums (and deductibles) if your state requires separate policies for hurricane, earthquake, or flood coverage. Often, these separate policies mandate a percentage deductible to help your insurance company afford to rebuild after a catastrophic loss. Your insurance company might offer a higher premium for a flat rate deductible, which would save you money in the long run. The options vary state by state, though, so be sure to check with your insurance agent first.
Regardless of your insurance deductible, what’s most important is to keep your home safe and in sound condition, especially in the event of an emergency. That’s why the professionals at Storm Guard Restoration not only provide a fair and accurate assessment of the damage, they’ll work with your insurance company to make sure the costs are covered.