We all like to save money. And, being totally honest, most of us can think of more fun things to spend money on than insurance. However, many people place their family, future, and finances at risk because they don’t take the time to establish and understand the protection they need for their home, family, and future. All too often, people choose the lowest price instead of picking the protection plan they need. In the long run, this lack of planning typically ends up costing more money or the person doesn’t have the coverage that they need in the event of a claim. Taking a few minutes to understand what coverages you have on your policy and how they protect you ends up saving you time…and money.
One part of an insurance policy that confuses a lot of people is: deductibles. So, we’ve comprised a brief snap shot for understanding the different deductibles, how they work, and how they impact your premium.
1-) Deductibles 101: Simply put, a deductible is the amount that someone must pay before insurance will begin to pay for a claim.
On a regular home insurance policy, there is an “all perils” deductible and a “hurricane deductible”. The “all perils” deductible applies to any property damage covered on the policy other than damage caused by a named hurricane (which would come under your hurricane deductible). The “all perils” deductible typically has a few different options that can be chosen. Some of the most common “all perils” deductible amounts are $1,000 or $2,500, although various insurance providers may offer different deductible options so be sure to ask. The “hurricane deductible” is the amount that is paid out of pocket by the property owner for any property damages caused by a named hurricane. This deductible amount is typically much higher than the “all perils” deductible and if often shown as a percentage of the home coverage amount (for example: 1%, 3%, 5%, etc.).
For an auto policy, you have a deductible for your comprehensive and collision coverages. There is no deductible for liability claims for home or auto, only for property damage. It is important to note that the deductible is the amount that the client must pay before insurance steps in to pay the claim within the terms of the policy. Often, clients will choose higher deductibles and then, when it comes time to file a claim, they cannot pay the higher amount. It is very important to be sure that you have the ability to pay the deductible that you choose on your insurance policy.
2-) How Do Deductibles Impact My Premium?: Great question! Do you remember the seesaws in the playground when you were younger? When one side went up, the other went down and vice-versa. Your deductible and premium work in much the same way. When you increase your deductible, it lowers your premium. When you lower your deductible, it raises your premium. The key to finding the tailored coverage that meets your needs is knowing how much of a deductible you can comfortably pay for in the event of a claim. Some people choose to set very high deductibles to keep their premiums low. Others prefer to have lower deductibles. Consider your personal situation before selecting your deductible amount.
3-) Deductibles And Claims: Typically, people that have higher deductibles file fewer claims. Why? Well, if we consider that the deductible is the amount that is paid out of pocket before insurance kicks in, then we will consider the cost to repair the damages before we file a claim. For example, assume that you get into a fender-bender and there is $500 worth of damage to your car. If you have a $500 or $1,000 deductible on your auto insurance, it doesn’t make sense to file the claim, does it? However, if you have a $250 deductible on your auto policy, you are much more likely to file the claim, pay the $250 deductible, and allow insurance to pay the remainder of the damages. Multiple claims filed on your policy can also lead to rate increases. Being aware of when you would want insurance to pay for a claim can help your insurance professional create a plan that works best for you and your family.
To get the tailored policy coverage that you need for your home, valuables, auto, LIFE, or business, call The CHOICE Insurance Team today at 757-416-5100 and ask for a free, comprehensive review. Give us a call today!
All the Best,
The CHOICE Team
In 2008 Choice Insurance Agency was created out of the former Realty Consultants Insurance Agency founded in 1980 by George Ayers Capt. USN Ret. Since 2008 the Choice Insurance Agency has more than tripled in size and is continue on a track of rapid growth. The Choice Insurance Agency focuses on four areas of expertise: Private Client Group, Coastal Coverage, Senior Programs and Commercial/Business Insurance. Our business model has allowed us to expand into all of the states on the Eastern Seaboard from New York to Florida including Pennsylvania and DC to better serve our ever-growing client base. As an Insurance brokerage stationed in Hampton Roads with access to well over 40+ insurance carriers, the Choice Insurance Agency is able to shop for the best rates, cover those picky coastal zones and create a tailored plan to fit your insurance needs. The Choice Insurance Agency. Call us today and see why we are the top “CHOICE” in Hampton Roads.