By Regina Talbot, Talbot Insurance Agency
As you begin looking for a homeowners, condo, or renters insurance policy to help protect your investment, knowing your choices for the deductible is important. The deductible chosen can affect the premium paid.
What is a homeowners deductible?
A deductible is the amount you would feel comfortable paying towards a loss, should a claim occur, and it’s to be paid or incurred by the insured before the insurance company pays their portion of the covered loss. The deductible amount can be a set dollar amount or a percentage of your home’s insured value (1% or 2%). The deductible amount is determined by you when a policy is requested. As the insured, you can change the deductible amount any time after the policy is issued. Since a claim may occur in the future, you should always choose a deductible amount you are comfortable with.
How does a deductible work?
When you contact your insurance company about a claim, the insurer will determine the amount it will give you to cover the loss. When the claim amount is paid, the amount determined by the insurer will be applied and your deductible amount will be subtracted. For instance, if you have a roof claim and the insurer determines the loss is $5,000, you will pay the first $500 (as per your deductible) and the insurance company will pay the remaining $4,500. In general, each time a claim is filed, the deductible is applied.
Deductible vs premium for affordability
When deciding on a policy, a deductible can be a helpful way to move the premium price to something you’re comfortable with. If a lower deductible is requested, the policy premium will typically be higher. However, if a higher deductible is selected, then the policy premium will be lower.
For more information, contact Regina Talbot at 626-357-3401.
