Homeowners know that their insurance policy is designed to protect their house and belongings throughout perils and lengthy lawsuits. However, when deciding on a policy, it’s important to understand what the deductible means for you policy.
What is a deductible?
Within your homeowners’ insurance is a deductible. This is the total amount “deducted” from an insured loss. When filing a claim to repair your home or replace your personal belongings, the deductible would come out of your pocket.
There are typically two choices of deductible types:
- Dollar-amount: For example, $500 “dollar deductible”. If your claim was for $10,000, your insurance company would take care of $9,500 while you paid the remaining $500.
- Percentage based: This is 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.
What else should I keep in mind?
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). While a higher deductible will often mean lower monthly premiums, you should first consider if you can afford the high out-of-pocket deductible cost, should you file a claim!
To determine the best home insurance policy for your needs and budget, contact the industry experts at Agers Insurance Services! We serve Oakley and Northern California with quality insurance services – contact us today to get started.