Deductibles are the out of pocket costs that one must pay to evoke their insurance, and it only when the deductible is paid that your insurance kicks in to cover all that it includes. In simpler terms, when a disaster strikes your home, the deductible amount is deducted from the claim. From the paradigm of shared risks and security, your deductible is a risk shared between the policyholder and the insurance company/insurer. 

Deductibles are common in the world of insurance and can be found on the first page or the “declarations” page of most standard homeowners and auto insurance policies. 

Now, deductibles aren’t a secondary feature in your insurance policy. They are as important as the policy itself. Particular regulations guide these policies and can vary from state to state. 

How deductibles work on homeowner insurance policies 

The deductible amount can be a fixed number, or it can be a percentage of the total amount of insurance. It varies. For homeowners, in specific, the deductibles are executed in terms of percentages. For instance, if your house is insured for any amount, say, $100,000, and the deductible percentage applied to it is 2%, then $2000 will be deducted from your claim payment. Moreover, deductibles aren’t a one-time thing. They are applied every time you register a claim. 

Disaster deductibles 

It is imperative for homeowners to know how each disaster has its own set of rules for deductibles because they are generally applied to property damage and not the liability portion of the home insurance policies. 

Earthquakes 

In the more prone to earthquakes, the percentage of deductible can vary anywhere from 2% to 20%. 

Floods 

Flood insurances offer a range of deductibles. They can either be in the form of percentages or dollar amounts. They vary, and you will have to check from your insurer to select the best one for you. 

Hurricanes 

Hurricane deductibles are applied to claims via specified triggers assigned by your insurance companies. These deductibles are expressed in percentages, mostly and are higher than the rest of homeowners’ deductibles. 

Wind/hail deductibles 

These are very similar to hurricane deductibles and are most common in states which experience these severe claims. They can be anywhere from 1-5 percent. 

Can you raise your deductibles to save money? 

Yes, they can help you save a great deal of money on your premiums. When you raise your deductible amount to $2500, you will be making a huge saving on your policy’s cost. You can save thousands of dollars on your insurance by developing a strategy that balances your financial situation with deductible amounts. Say, if you never have to make a claim and pay that higher deductible, then all that extra money stays in your pocket. On the other hand, if you end up needing to pay your deductible, you’ve got the money ready. 

At Paradiso Insurance, we want the best for our clients. That is why the deductibles applied to your home insurance policy are designed to benefit you. We remind our clients that, in the end, deductibles may offer a lot of savings, but they will be made from your own pocket. Keep that in mind, when increasing your deductible amount.