If you even have to use your home insurance (and most people will, even if it is just to get a new roof after extensive wind or hail damage), you might be wondering how your home insurance deductible works. Your deductible is going to affect just how much you have to pay out of pocket for a repair or damage remediation.
How does my home insurance deductible work?
Most policies are going to have what is called a deductible. This is a certain amount of money that the policy holder has to pay before the insurance company pays off the rest of the claim. For example, if your deductible is $1000 and the claim is for $2000, you would pay $1000 and then the insurance company would cover the rest of the claim.
There are some insurance policies that have special types of deductibles, usually for specific types of damage. For example, you might have a wind/hail deductible if you live in an area that gets significant wind or hail damage. If your home is damaged by one of these forced of nature, you would still have to pay that amount of money before the insurance would kick in to cover whatever is left over in your claim. Because wind and hail make up a huge portion of insurance claims, insurance companies have added a deductible just for this type of damage.
Are deductibles bad?
You’ll like hear people complaining about their deductible. It’s important to keep in mind that a deductible keeps insurance affordable. If you have enough money on hand to pay a higher deductible, you could see a much lower premium. On the other hand, if you choose a lower deductible, you might see higher monthly premiums. While there are many factors that go into formulating your premium, you deductible is one of them.
A deductible protects you and your property from damage and helps to keep the price of insurance down, not just for you, but for all customers. Special deductibles, like those for wind and hail or tornadoes are more likely in areas of the country where damage from this type of weather are common. If you do not live in a part of the country where you are likely to ever see a tornado, you will not have to worry about this type of deductible.
What can I do to manage my costs?
If you do live an area where you are likely going to have to pay your deductible because of damage to your home, there are a few steps you can take to proactively mitigate its cost. These include:
1. Actually read your policy and see what it says.
If there has been a change to your policy, you might out about it only by reading your policy. Even if there is no change to your coverage, you should still read the policy and see what it says explicitly about your deductible.
2. Talk to your agent.
If you’re not sure what exactly your policy covers or in what situations you would have to pay a special deductible, your agent is a great resource. They should be able to explain the exact nature of your deductible to you, along with any other details of your policy that you might not understand.
3. Get ready.
If you do live in a part of the country that often gets severe weather, you can prepare your home to avoid extensive damage and put aside a chunk of money that will specifically be used to pay your deductible should you need to.
