Originally published 5/10/2018
Let’s talk about your deductible…
Now is a good time to begin reviewing your homeowner’s insurance requirements. Hurricane season officially starts June 1st.
Click here for our previous post on the new flood zones.
Click here for our previous post on flood insurance.
Depending on your situation, your homeowner’s and flood insurance policies may represent a significant expense for you. One way to lower the cost of your premium is to increase your deductible. If you don’t know what your deductible is, contact your insurance company to find out, and to discuss the effects of different deductible levels.
But HOLD ON!
In the event you have to make a claim, you will have to pay your deductible amount out of pocket. For example, if you have a $3,000 deductible and you file a claim for $10,000, your insurance company will only cover $7,000 of the claim. You will have to pay your $3,000 deductible out of your own funds.
Consider your financial situation carefully. How much do you have in your emergency fund? (Do you have an emergency fund?) Do you have enough money readily available to cover your deductible amount? Also consider that there may be a time lag between when you file a claim, and when your insurance company makes payment. In the meantime you will have to cover short term or emergency expenses such as dining out, extra gas for evacuation, or a hotel stay. When you are talking with your insurance company, ask how long it takes them to pay a claim.
Click here for a good article on insurance deductibles from The Simple Dollar.