Understand Your Homeowners Insurance Deductibles Before Disaster Strikes

When the sky is clear and sunny, few people think about their home insurance.  However, this is the ideal time to review your policy.  Do you have adequate coverage? Do you understand your homeowner’s insurance deductibles?  

Take time now to review your policy and know how your deductibles work before disaster strikes.  It’s easier to make adjustments now rather than deal with the consequences of being underinsured when your home suffers damage.

Understanding Deductibles

A deductible represents the shared risk between the insurer and the policyholder.  It is a vital element of all types of insurance policies.  In the event of a claim, the policyholder pays the deductible before the insurance company pays its share.  

Increasing the deductible generally lowers premiums. Policyholders typically have a flat deductible that applies to all covered property damage losses.  Other deductibles are available, depending on the insurance company.  

Different Types of Deductibles

Homeowner’s insurance policies generally offer two different types of deductibles:  standard and percentage. 

Keep in mind that homeowners insurance deductibles differ from health insurance deductibles.  Health insurance policies have a maximum out-of-pocket amount you pay in one year.  But, with homeowners, you must pay a deductible on a per-claim basis.  

>  Standard or Flat Deductible

A standard deductible is a fixed amount, typically ranging from $500 to $2,000.  In the event of a claim, the amount you must pay stays the same, regardless of the costs of damage.  

>  Percentage Deductible

Wind or Hail Percentage Deductible or a Named Storm Deductible are extra endorsements often added by homeowners residing near the coast.  These endorsements provide additional coverage above the standard policy.  

These deductibles apply if any losses are caused by wind or hail.  The percentage options range from 1% to 10%.  The deductible is calculated by multiplying the percentage by the coverage amounts for Coverages A, B, and C.  The amount is compared to the minimum and maximum deductible amount for each coverage as stated on the Declarations Page of your policy.

Percentage deductibles may be required in areas prone to earthquakes, strong storms, hurricanes, or floods.

Here’s an example of how percentage deductibles work:

If your home is insured for $300,000 and the percentage deductible is 1%, you would pay $3,000 out of pocket for a covered claim.  For a claim of ,000, your insurance company would cover ,000.

Choosing the Right Deductible

Choosing the right deductible means taking a serious look at your finances and determining how much you could afford to pay in the event of a claim.  You should compare the short-term costs of a deductible against the long-term cost of the policy. 

The amount of your deductible directly affects the monthly or annual policy premium.  But, keep in mind that a high deductible can leave you in financial distress if you suffer loss or damage.  

Whatever deductible you choose, it’s wise to have that amount in savings in case you need it.  This way, you are financially prepared and can avoid financial disaster if your home is damaged.  Depending on the insurance provider, your premium may increase after a claim or two regardless of the deductible you choose.

How to Save on Homeowners Insurance

Even with a high deductible, you may find that your insurance premiums are difficult to handle.  But, you can find ways to save on home insurance.  Some companies offer discounts if you install smart-home features.  They may even offer discounts for bundling your home, auto, and life insurance with their company.  

Many insurance providers offer discounts for installing burglar alarms, dead-bolt locks, and smoke detectors.  Some offer discounts if you install a sophisticated sprinkler system.

You can also cut your premium by maintaining a good credit score and by staying with the same insurer for several years.  Also, be sure to review your policy once a year at least.  This will help ensure that new purchases or improvements are covered.  Buying a home near a fire hydrant or professional fire department will also save money on your premium.

Get the Right Coverage at the Best Price With Sandifer Insurance

Everything about insurance is confusing.  From limits of liability to deductibles, it’s hard to know if you’ve made the right choices.  You can compare quotes and talk to different agents, yet still feel overwhelmed.  

The team at Sandifer Insurance Agency can make the process much easier.  We have over 40 years of experience in helping customers save money and get the peace of mind that comes from knowing their homes are protected.

If you are shopping for homeowners insurance, contact the experts at Sandifer Insurance Agency.  We will be happy to help you clear up some of the confusion and recommend the right policy for your needs and your budget. 

We proudly serve customers in Cheraw, SC, and surrounding areas.  We are conveniently located near historic downtown Cheraw, so stop in or call us today to learn more about what we offer. 

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