Managing Deductibles

By
Real Estate Broker/Owner with Morningside Homes, LLC 720-231-5200 DRE# ER300941

                 Managing Insurance Deductibles

The purpose of insurance is to shift the risk of loss to a company in exchange for a premium. Most policies have a deductible which is an amount the insured pays out of pocket before the insurance starts covering the cost of the loss.

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In the process of managing insurance premiums, policy holders often consider adjusting their deductibles. Lower deductibles mean less money out of pocket if a loss occurs but obviously, results in higher premiums. Higher deductibles result in lower premiums but require that the insured bear a larger amount of the first part of the loss.

A small fire in a $300,000 home that resulted in $2,500 of damage might not be covered because it is less than the 1% deductible. If the homeowner can afford to handle the cost of repairs in exchange for cheaper premiums, it might be worth it. On the other hand, if that loss would be difficult for the homeowner, a change in the deductible could be considered.

It is a good idea to review your deductible with your property insurance agent so that you're familiar with the amount and make any changes that would be appropriate.
           

Posted by

Buy or Sell with Patty Clark              Denver/Aurora Co. and surrounding areas 

Chris and Patty

    Helping Families Move with Care

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Morningside Homes, LLC
patty@morningsidehomes.com

www.morningsidehomes.com
Cell: 720-231-5200                       CRS,GRI,WCR,SFR,CNE, MRE

 

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Rainmaker
1,065,387
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Chris and Patty, this is a great article.  Many do not pay enough attention to the deductibles on their various policies.

Jul 23, 2012 04:42 PM #1
Rainmaker
487,262
Patty Clark
Morningside Homes, LLC 720-231-5200 - Denver, CO
Helping Families Move with Care

Sharon, You are so right.  It happend to me with needing a roof repaired and then found out there was a 2% deductable instead of the usual $1000. I changed the deductible waited a few weeks then got a new roof for the $1000.

Jul 23, 2012 05:34 PM #2
Rainmaker
316,584
Frank Laisch
Orlando, FL
"The Insurance Guy"

So very true, Sometime people raise their deductible very high, they can't afford the actual deductible, especially if they raise to a 5% earthquake or hurricane deductible.....

Jul 23, 2012 09:35 PM #3
Rainmaker
487,262
Patty Clark
Morningside Homes, LLC 720-231-5200 - Denver, CO
Helping Families Move with Care

Frank, Hurricane and earthquake is 5% deductible? That is really high and I was complaining about 2%. I have changed that 2% to $1000.

Jul 24, 2012 02:14 AM #4
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Rainmaker
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Patty Clark

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