What Is The Difference Between High & Low Deductibles?
Whether you are talking about your homeowners insurance, your auto insurance, umbrella, boat… the list goes on. You have a deductible that applies to each of these policies.
Let’s talk about what your deductible is.
With regards to your homeowners policy, your deductible is the amount of money that you’re responsible for paying before your insurance company will pay for your covered loss. If your home sustains a $50,000 covered loss, your insurance company will pay for $49,000 if your deductible is $1,000.
How does your deductible affect your premium?
The amount you pay towards your premium is directly affected by how high or low your deductible is. Here are a couple of things you should think about when determining what your deductible should be:
- How much can you afford to pay towards your insurance premiums?
- How much can you afford to pay out of pocket should something happen?
So what if your claim doesn’t involve any property damage but is a liability claim instead? Someone gets injured and needs medical attention. In this event, you would not need to pay a deductible on your liability claim.
You’re probably wondering how this applies to your auto insurance as well? Well, its pretty much the same thing. The higher the deductible the lower your premium. But you have to keep in mind that the higher the deductible, that’s more you have to pay out of pocket. On the flip side, the lower your deductible the less you have to pay out of pocket but your premium will more than likely be higher.