Today I want to talk to you about deductibles, specifically for your homeowners insurance. Deductibles are a critical factor in managing exposure. 3 questions we often receive here at Courtney Insurance Services are: What is a deductible?, How are deductibles calculated?, and What deductibles should I have?
What is a deductible?
A deductible is the agreed amount of money the insured (you) would be responsible for in the event of a covered loss before the insurance company would pay a claim. Most homeowners insurance policies have deductibles and sometimes have different types. Common types are Wind/Hail, Named Storm (Hurricane), and All Other Perils deductibles. These can either be stated amounts or percentages based off of your Coverage A (Dwelling) Coverage. Your policy’s deductibles can be found on the declaration page.
How are deductibles calculated?
If your policy has percentage based deductibles this refers to a percentage of Coverage A (Dwelling) Coverage, NOT a percentage of the loss at the time of a claim. It’s important to understand this previous to experiencing a claim so there are no surprises. For example, if your Dwelling Coverage is $300,000 and you have a 2% Wind/Hail Deductible, that would mean your Wind/Hail Deductible is actually $6,000. In this example, if you experienced damage due to hail, you would be responsible for the first $6,000 of damage before the insurance company would pay for any damages.
If your deductible is stated at $2,500 then you would be responsible for the first $2,500 of a covered loss. Deductbile options vary from carrier to carrier.
What deductibles should I have?
Since not every carrier offers the same deductible options it is important to factor them in when seeking homeowners insurance. Deductibles directly affect premium. The higher the decutible amount, the lower the premium and vice versa. However, there are occasions where the premium difference is miniscule, so be sure to ask your agent for options. Deciding how much exposure you would be comfortable with in the event of a loss is the best way to start.
At Courtney Insurance we strive to give our clients the best options available, educate them on what they are unaware of, and empower them to make the decision that best fits them and their family! We would be glad to review your policy with you! Give us a call today at 985-542-6900 or visit our website www.courtneyinsurance.com for more information!