Part of selecting a home insurance policy is deciding on the type of deductible you want. However, you may be a bit confused about how the deductible works. Here are a few key things to know about your home insurance deductible.
The Deductible Impacts The Price You Pay
One thing that can have a big impact on your annual premium is the deductible. A high deductible means that you are going to be paying more out of pocket to use your home insurance, but you'll have lower annual premiums as a result. The opposite is true as well, where a low deductible results in a higher premium.
The Deductible Should Be Affordable
It's important to find some sort of balance with what you can afford to pay at the time you make a claim with your insurance company. While you may want to make your deductible as high as possible to keep your premium low, you could run into an issue where you don't have the cash on hand to pay the full deductible. Keep your emergency fund in mind when you determine what kind of deductible you should have, since you should be able to pay that deductible in full if it is necessary.
The Policy May Have Different Deductibles
Be aware that there may be multiple deductibles for the different types of claims you could make with your insurance policy. You'll need to know about how much each deductible is so that you are prepared for when the time comes to use your insurance.
A crime deductible is for things like theft and vandalism. If you have coverage for flooding or earthquakes, there could also be a separate deductible to use that additional coverage that you purchased. You may even have a different deductible for roof damage.
Your insurance provider may also have a single deductible to keep things simple. This means that any type of damage is covered under the same deductible, and it must be paid before you can use your insurance.
The Deductible Can Be Changed
Know that you are not locked into the deductible you picked for the entire time you hold that policy. You can always contact your insurance provider and make changes to it. You'll be given a refund if you increase your deductible to lower your premium, or you may be required to make an additional payment if you lowered your deductible.
Reach out to your home insurance provider for more information about deductibles.
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