High Deductible Home Insurance Policy Pros and Cons

​A percentage deductible is usually higher than that of the standard flat-rate based on the insured value percentage of your home. Although those high deductible home insurance policies can save your money on annual premiums, this factor is still a case-to-case basis. Here are some advantages and disadvantages of this policy that you must know before you sign.

Can Save More Money
In general, the higher the deductible, the lesser you will pay in premiums. For example, if you don't have a claim and you are saving $400 annually in a high deductible insurance policy, you can save $2000 after five years, which can help offset a higher deductible later on. Thus, this type of plan significantly aids you if you want to lower your premium, and you prefer a self-insured claim more than claims.

Not Dependent on the Market Value
The deductible depends on your home's insured value, where most policies count insured value as the amount spent on rebuilding the house in today's construction costs. The insured amount does not depend on the market value or how much you pay for your home.

Although your claim is not that much, the deductible only depends on the market amount of the house. For instance, your home has an insurance value of $100,000 with two percent deductible. Then, the kitchen fire casualties cost $5000 in damages. Thus, you will be receiving $3000 from your insurer.

Deterrent of Claims
Most insurance agents imply that a home insurance policy having a high deductible decreases the tendency of submitting a claim for something of a small loss. It may also incur an additional payment after paying claims or may get canceled if you claim several times already. Thus, it is recommendable to pay those small losses and save for a massive loss. Insurers are more lenient for one significant over several small claims.

Fluctuating deductible
A flat-rate deductible usually does not change unless you request for it. However, in a percentage deductible, the amount increases as the insured value of your home increases either, so you must always review your policy yearly with an insurance agent. You must always ensure that the coverage covers the new construction costs.

Being a homeowner of high deductible insurance policy takes more risk and willingness to cover for small repairs included in homeownership. Thus, you must always review policies carefully to make sure that you get the best option.

At AllRisk Auto Insurance, LLC, we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (360) 693-4044 or Click Here to request a free quote.