Homeowners Insurance Deductible Guide: Transfer of Risk Strategy

Majority of customers don’t select their own home insurance deductible on their homeowners insurance policy

Their insurance agent does

When we meet with potential homeowners insurance  customers we often see the All Other Perils deductible at $1000 on their existing home insurance policy regardless of the value of the house.

A home valued at 750,000 should not have the same deductible as a home valued at 100,000.

As I discussed in previous blog posts about Grand Blanc homeowners insurance, a home insurance policy is not a maintenance policy or a home warranty policy.

To keep your home insurance rate at an affordable level, you should take the highest deductible you can afford.

Can you handle a $2500 deduction from a water damage claim check to replace your wood floors?

If not, you want a $1000 deductible.

Here is a quick rule of thumb guide to determine the correct amount of your All Other Perils Deductible

If the value of your house is

• 100,000 – 199,000 your deductible should be $1000
• 200,000 – 499,000 your deductible should be $2500
• 500,000 – 750,000 your deductible should be $5000

You should have at least the amount of your deductible available in your bank account

HOW MUCH RISK CAN YOU AFFORD?

1.  Have you ever made a claim that was the result of a hurricane or a tropical storm?

2.  Have you ever made a water damage, fire, theft, hail or vandalism claim?

If you are not a home owner that makes claims, you should take a higher deductible and pocket the rate savings if you can afford to do so.

TIP:  A home insurance deductible is not the amount you owe to the Insurance company if you make claim.

It is the amount deducted from the claim check.

It is also the amount you agree to pay for damages out of your pocket to the contractor making the repairs.

RATE SAVINGS TIP

You should keep your Hurricane Deductible as low as possible and adjust your All Other Perils Deductible based on your financial comfort level and claim history record.

How much can I save by taking a higher deductible?

This all depends on the home insurance company you are insured with.

Some companies may only offer a minimal premium savings by taking a higher deductible.

But other insurance companies understand the transfer of risk and will offer a much deeper premium discount.

Discussing your All Other Perils deductible with an insurance advisor is important because we can provide not only more than one deductible option but more than one deductible option from multiple homeowners insurance companies so you can choose the company YOU want and the premium discount that makes financial sense to you.

My name is Anton Thornquist and I would like the opportunity to review some different deductible options with you.

Call me at 800-732-0096 or complete the quick contact form to get started