When buying a home, you will be required to purchase a homeowner's insurance policy for the home before you actually close on it and take ownership of it. If you have never purchased a policy before, you might not know how to answer some of the questions the agent asks you during the conversation, and one of the questions might be about the deductible amount you would like. If you are not sure how much to choose as your deductible, here are a few important things to know about insurance deductibles.
What a Deductible Is
Before you can choose an amount as your deductible, you must fully understand what a deductible even is. With insurance, a deductible refers to the amount of money you pay out of your pocket when filing a claim. This amount is something you must pay before your insurance company pays the rest of the claim, and you can choose any amount that you want.
Some people choose low amounts, such as $250 or $500, while others may choose amounts as high as $10,000. Most people, though, will choose a deductible in the area of $1,000 to $2,000, but the choice is yours. When you have a low deductible, you pay less anytime you file a claim. When you have a high amount, you will pay a lot more when filing a claim.
Factors to Consider When Choosing this Amount
Before you rush into choosing a low amount for your deductible, you should realize that the amount you choose will affect the premiums you pay for the policy. To save the most money on your insurance expense, you would want to choose a really high deductible, as higher amounts yield lower premiums.
The problem with choosing a higher amount is that you would have to pay this amount if you filed a claim. Because of this, you should always make sure you could afford to pay whatever amount your deductible is at any time, as you never know when you will need to file a claim. If paying a higher deductible would not be a problem for you at any time, you could benefit greatly by choosing a higher amount. If you know that this would be a problem, it might be better to choose a lower amount and pay slightly higher rates on your policy.
If you are still unsure about the right amount to choose for your homeowner's insurance deductible, you should talk to an insurance agency to learn more.Share