Schedule a Tour

Schedule a Tour

Insterested in our properties? Do not hesitate and book a viewing. We have a large
selection of options available.

    Balancing Risk and Deductibles

    The benefit of insurance is to transfer the risk of loss to a company in exchange for a premium. The deductible is an amount the insured pays out of pocket before the insurance starts covering the cost of the loss. The challenge is to balance the risk an insured can accept with the premium being...

    The benefit of insurance is to transfer the risk of loss to a company in exchange for a premium. The deductible is an amount the insured pays out of pocket before the insurance starts covering the cost of the loss. The challenge is to balance the risk an insured can accept with the premium being charged.

    To manage insurance premiums, policy holders often consider adjusting their deductibles. Lower deductibles result in less money out of pocket if a loss occurs in return for higher premiums. Higher deductibles will lower premiums but require that the insured bear a larger amount of the first part of the loss.

    Insurance companies offer deductibles as a specific dollar amount or as a percentage of the total amount of insurance policy. The amount is usually shown on the declaration page of homeowner and auto policies.

    A small fire in a $300,000 home that resulted in $5,000 of damage might not be covered because it is less than the 2% deductible which would be $6,000. If the homeowner can afford the cost of repairs in exchange for lower premiums, it might be worth it. On the other hand, if that loss would be difficult for the homeowner, a change in the deductible for higher premiums could be considered.

    Raising deductibles can save money in the present when paying the premium but could cause problems later if a claim occurs. Homeowners should review deductibles with their property insurance agent to be familiar with the amounts and make any changes that would be appropriate.

    Share

    0 0 votes
    Article Rating
    Subscribe
    Notify of
    guest
    0 Comments
    Oldest
    Newest Most Voted
    Inline Feedbacks
    View all comments
    Schedule a Tour

    Schedule a Tour

    Insterested in our properties? Do not hesitate and book a viewing. We have a large
    selection of options available.

      0
      Would love your thoughts, please comment.x
      ()
      x