When selecting your deductible, be sure to know what you’re signing yourself up to.
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 ...