"This policy contains a clause which may limit the amount payable." Have you ever wondered what this means? Almost all home insurance policies include this phrase somewhere on page one.
This refers to your deductible. In the majority of policies, a deductible is paid by the policy holder when a loss is incurred. Depending on the kind of loss, the deductible amount usually varies. A loss is only paid out to the policy holder after the deductible is paid. The larger the deductible, the lower the premium.
A policy may have different deductibles based on the peril of the loss. The most common types of deductible are:
Glass breakage deductibles are to cover broken glass that is part of your home. Paying a slightly higher premium rate will generally make it so the home owner doesn't have to pay this deductible.
Earthquake deductibles are for earthquake damage to the home. Typically, you get to choose from a few different earthquake deductible options. A percentage of the total property covered by the insurance plan is calculated, and the home owner can choose from these.
Crime deductible: Applies to claims resulting from vandalism, theft, burglary and mysterious disappearance. Vacation and rental properties are generally the only property that these deductibles apply to. You can usually choose from two deductible options, which are $5,000 and $10,000.
Water deductibles are for water related damage claims, and these are generally for rentals and vacation homes. Generally it's $2,500 or $5,000 for the deductible amount options.
Standard policy deductibles are for to cover other kinds of claims that we have not covered here. Typically, you get to choose from several options, which range from $500 to $5,000.
Premiums are kept low by having deductibles, which will stop a home owner from making minimal damage claims. Payments made by insurance companies are lower, and this is the reason they can offer low premiums.
If you have a low deductible you may be tempted to make claims on very small losses. When these minimal claims are made, the home owner will typically lose their "claims free discount". Also, after a few small claims, you'll likely see your base rate go up, possibly costing you more than it would have cost to replace the small items yourself. Home owners who make claims too often sometimes find the insurance company refusing to renew their insurance.
Premiums will be much lower when the home owner makes the decision to have a higher deductible. Small losses may not be covered, but you're really buying insurance to protect yourself from a catastrophic loss, such as earthquake, fire, windstorm damage, water damage, and break-ins. As such, it may be worth your while to opt for a higher deductible. Premiums will be lower when you repair or replace small damage or loss on your own, and overall, your costs will be lower. Your insurance will be there for you when you really need it.
This refers to your deductible. In the majority of policies, a deductible is paid by the policy holder when a loss is incurred. Depending on the kind of loss, the deductible amount usually varies. A loss is only paid out to the policy holder after the deductible is paid. The larger the deductible, the lower the premium.
A policy may have different deductibles based on the peril of the loss. The most common types of deductible are:
Glass breakage deductibles are to cover broken glass that is part of your home. Paying a slightly higher premium rate will generally make it so the home owner doesn't have to pay this deductible.
Earthquake deductibles are for earthquake damage to the home. Typically, you get to choose from a few different earthquake deductible options. A percentage of the total property covered by the insurance plan is calculated, and the home owner can choose from these.
Crime deductible: Applies to claims resulting from vandalism, theft, burglary and mysterious disappearance. Vacation and rental properties are generally the only property that these deductibles apply to. You can usually choose from two deductible options, which are $5,000 and $10,000.
Water deductibles are for water related damage claims, and these are generally for rentals and vacation homes. Generally it's $2,500 or $5,000 for the deductible amount options.
Standard policy deductibles are for to cover other kinds of claims that we have not covered here. Typically, you get to choose from several options, which range from $500 to $5,000.
Premiums are kept low by having deductibles, which will stop a home owner from making minimal damage claims. Payments made by insurance companies are lower, and this is the reason they can offer low premiums.
If you have a low deductible you may be tempted to make claims on very small losses. When these minimal claims are made, the home owner will typically lose their "claims free discount". Also, after a few small claims, you'll likely see your base rate go up, possibly costing you more than it would have cost to replace the small items yourself. Home owners who make claims too often sometimes find the insurance company refusing to renew their insurance.
Premiums will be much lower when the home owner makes the decision to have a higher deductible. Small losses may not be covered, but you're really buying insurance to protect yourself from a catastrophic loss, such as earthquake, fire, windstorm damage, water damage, and break-ins. As such, it may be worth your while to opt for a higher deductible. Premiums will be lower when you repair or replace small damage or loss on your own, and overall, your costs will be lower. Your insurance will be there for you when you really need it.
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