Understanding Different Home Insurance Deductibles
An insurance policy is not entirely a unilateral agreement because while your insurance company agrees to mete out insurance benefits up to a certain limit for qualified losses, you also agree to make some payments. First, you must pay your premiums on time in order to keep the policy in-force, and second, you agree to pay your deductibles.
Deductibles are the dollar amounts that your claims value must exceed in order to qualify for insurance reimbursement. Damages up to the amount of the deductible are paid for out of your own pocket and can range greatly. Since they are the portion of the liability that you accept, the higher they are, the less your premiums will be.
You may notice on your policies that you have more than one deductible. In many instances, insurance companies set a certain deductible for property or contents loss caused by some incidents and a separate deductible for one or two specific insurable incidents.
For example, your policy may have a 1% deductible for damages caused by fire or theft, but the deductible for damages caused by a hurricane could be substantially more—like a 2 or 3% deductible.
Generally, the decision to offer different deductibles for different risk comes when an insurer assesses that there is a greater risk of one incident than another. This helps the insurer control their likelihood of exposure and better manage the payment of claims for all their customers.
It is important to note that your flood insurance premium is a separate entity from your home insurance premium. Since floods are not qualified insurable incidents in a home insurance policy, they are covered by a separate policy and, therefore, a separate premium.
Make sure you look at your home insurance policy closely and identify this variety in deductibles. The differences could mean that you need to adjust your savings plan so that you have enough cash to pay your deductibles, no matter what incidents occur that require you to do so.
Protect your home and everything inside of it. Call Best Insurance at 979-297-2655 for more information on homeowners, auto or commercial insurance.