Determining the Right Homeowners Insurance Deductible

The premiums you pay for homeowners insurance largely depend on how much deductible you’re willing to pay.  Lower deductibles make insurance premiums higher per month, while higher deductibles make premiums lower per month.  Both have their advantages and drawbacks.  The result you choose depends on how much you can handle the pros and cons of each.

Lower deductibles means the insurance will pay more than you do when a situation arises.  You will still have to pay; insurance deductibles can be as low as $50 and if it’s that low, that’s the amount of money you will owe.  A disadvantage is that insurance premiums are much higher per month.  This is a better option for anyone that cannot afford to pay out of pocket, but have the money available to pay the monthly premiums.

Higher deductibles make your premium insurance bills lower, and that means more money in your pocket.  The disadvantage only comes when a situation arises.  High deductibles means the insurance company won’t have to pay much out of their pocket.  You will end up paying the majority of it yourself.  So if your deductible is $5000 and the damage is at $4500 you will have to pay it all yourself.  However, if the damage is $6500 you pay $5000 and the insurance will pay the rest-$1500.  If there is no situation, this may be a good option (assuming that you have enough money saved up for those sudden situations).

The answer depends on what you can afford.  To remain covered you will have to keep your premiums up.  You can always change the policy if it becomes a financial strain, but only when the policy expires.  You may be able to mix and match high and low deductibles for each section of the policy.  In addition you’ll never know what will happen in the future, so pick a deductible that you’re willing to pay in case of emergency.  It’s all about how much money you are willing to part with each month and how much money you’re willing to pay if something happens.  Contact us for more information on homeowners insurance.