Your homeowner’s deductible is the amount in dollars, of risk that you are prepared to accept and pay in the event that you need to make a claim on your policy, BEFORE your home insurance provider will pay out on any claims. If you’re finding that the cost of your monthly premiums is increasing annually and you’re looking to save, raising the dollar value of your deductible is an easy way to reduce the risk to your insurance provider, and therefore reduce your premiums. For example, if your deductible is currently $200, raising it to $500, or even $1,000 can make a really big difference on your premiums – saving you as much as 25% on the cost of your annual or monthly premiums.
Many home insurance providers now offer deductibles that equate to just 1% of your home’s insured value ($2000 deductible on a $200,000 home). While it may seem like quite a large amount to have to pay if you need to make a claim, the reduction on your premiums may be worthwhile for you. The important thing is to make sure you have the deductible cost to pay out should you need to make a claim! Home insurance is a way of sharing the risks (for a small fee) of owning a home that are largely beyond your control with others. Your deductible is an indication of how much of that risk you’re willing to assume.
