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Personal Insurance

What homeowners deductible should I choose?

By February 27, 2018March 8th, 2019No Comments

There are many options when it comes to choosing a homeowners insurance deductible. The most common deductibles I see are $500, $1000, and $2500. Here are three strategies you can utilize when considering a deductible option:

1. Raise your deductible to lower your annual premium

I personally use my homeowners insurance for catastrophic coverage. This means I am fine having a higher deductible (I personally have $2500) in an attempt to keep my annual premiums as low as possible. When I see customers who have a $500 deductible on their home, I often ask them if they would consider raising their deducible to save (sometimes hundreds of dollars) on their policy. Most times they are happy I pointed out they have such a low deductible because no agent has ever brought it to their attention.

2. Look closely at your policy to determine if you have a separate wind and hail deductible

Usually your policy will have a “wind/hail” deductible and a separate “all other perils” deductible. Depending on the carrier these two can be the same amount – or they could be different. Sometimes your “wind/Hail” deductible is a % of your coverage A amount. In other words you could have a $1000 deductible on your home with a 2% wind/hail deductible. On a $250,000 home this equates to a $5,000 wind/hail deductible. That could be quite the surprise when it comes time to report a claim!

3. Flood insurance deductibles can be much higher

If you are in a flood zone and are required to carry flood insurance you have several different deductible options. There are so many increments one can choose on a flood policy.  I had one customer who wanted a $10,000 deductible. I was afraid his lender would not allow that large of a deductible but they did. It lowered the premium quite low and he was willing to self-insure the first $10,000 in damage to his property due to flood.

Deductibles are truly driven by personal preference. There is no right or wrong answer – and knowing your deductibles can be helpful in the event you need to file a claim. If you have a higher homeowners insurance deductible you will be responsible for the majority of the smaller losses occurring at your home. Avoiding small claims on your home is another strategy to keep your annual premiums low.

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