Should You Pay a Higher Home Insurance Deductible?

One of the basic facts of all insurance policies is that the higher amount of a deductible you pay, the lower premiums will be. The question is how much deductible should you pay? Many people are confused about this issue; the amount of home insurance deductible you pay is will be used to cove damages before insurance benefits take effect. Many homeowners decide that they can afford to take on additional risk and choose a higher deductible to be able to pay a lower premium. Your insurance agent is the best source of information regarding the range of deductibles available for your home insurance policy.

There are "flat rate deductibles' for example, deductibles in the amount of $1,000 or $5,000. Today there are many home insurance companies that use "percentage deductibles' where the homeowner pays 1 to 5 percent of the home's insured value before the insurance company picks up the tab for home insurance policies that cover natural disasters. What that means is that if the cost to rebuild your home is $100,000 and you have a 5% deductible, you must pay the first $5,000 in damages.

Homeowners need to review their insurance policies on a regular schedule to be sure they are adequately covered and especially when their policy is renewed; some homeowners are unaware that their insurance carriers has switched them from flat rate deductibles to percentage deductibles because they fail to read the declarations page that accompanies your renewed policy or the notices that the home insurance company is required to send. If you are not sure whether or not the amount of deductible is sufficient or if you think it is too much you need to contact your insurance agent immediately so that the deductible level can be adjusted.

Although paying a deductible will lower your premiums, keep in mind that this money must be paid before your insurance benefits will be available; make sure you keep this amount within your financial ability. Whichever type of deductible you have on your home insurance policy, it is wise to place this amount of money in a savings account to be sure it is available in case of an emergency. You should also ask your insurance agent about any changes to your policy that may affect the coverage level of your insurance and may require you to increase the amount of deductible you pay.