High or Low Home Insurance Deductibles – What Is Best?

Home Insurance Apple Valley MNYour deductible impacts your premium on your insurance policies.

When deciding on what homeowners insurance plan is best for you, you will be faced with many questions. The question that stumps most people is determining the deductible. As a deductible directly affects your premium, it’s important to understand what you are committing to!

What is the deductible?
A deductible is the amount you pay for expenses before your homeowners insurance begins to chip in. Your premium is the monthly amount you pay to your homeowners insurance company to maintain your coverage.

Deductible Types

There are generally two types of deductibles:

  • Dollar-amount: For example, $500 “dollar deductible”. If your claim was for $10,000, your insurance company would take care of $9,500 while you paid the remaining $500.
  • Percentage based: These are based on a percentage of your home’s insured value. If your home is insured for $100,000 and your insurance policy has a 2 percent deductible, $2,000 would be deducted from the amount you are reimbursed on a claim. For example, if the insurance loss is $10,000, you would be paid $8,000.

Review Your Finances

When selecting a deductible, you are really balancing the short-term cost that you can afford (your deductible) and the long-term cost of your policy (your premiums). The more you can afford in the short-term, the more you will save in the long-term – a higher deductible means lower monthly premiums. Before selecting a high deductible to  save a couple of dollars, consider if you can afford this cost out-of-pocket in the event of an accident.

Are you ready to determine the best deductible for your financial situation? Contact Mayer Insurance in Apple Valley, Minnesota for all of your home insurance needs today!