Deductibles are confusing as it is, let alone when you start adding on percentage deductibles. We understand that you do not have the time to go and do tons of research yourself. So in todays' blog we will go in depth not only on deductibles but also percentage deductibles.
What is a Deductible?
A deductible is the amount of money that you have to pay out of pocket before the insurance company will pay out your claim. For example, lets say that you have $1000 deductible on your home policy. Say your hot water heater bursts and you file a claim, as your house has been damaged to the tune of $10,000. You as the homeowner will have to pay out $1000 for the repairs before the insurance company dishes out the other $9000. Choosing what deductible is right for you is all based on how much money you believe you can pull out of thin air at any given time. A higher deductible will mean that your premiums will be lower and vice versa with a lower deductible.
What is a Percentage Deductible?
A percentage deductible typically will be an option on your homeowners policy. It is a deductible that is calculated based on a percentage of the home's insured value (dwelling coverage). For example, let's say your home insured value is $600,000 and you have a 1% deductible, you would have a $6000 deductible. As in the same situation before, if you have $10,000 worth of damages, you would have to pay $6000 out of pocket before the insurance company will cover the rest of the claim. A $1,000,000 home with a 1% deductible would come out to be $10,000. For future reference, a company like State Farm only does percentage deductibles for their home policies. It is important to ask your insurance agent what type of deductible you have before signing onto a new policy. If you are able to pull immense amounts of cash out of your bank account at any given time then a percentage deductible may be worth it for you. However, percentage deductibles will almost always end up with a much higher price tag then a flat deductible.
Percentage deductibles, along with almost everything in insurance, is all based on your needs. over her at AZ Insurance Team we pride ourselves on finding the perfect policy for all of our customers. Give us a call today at (480) 535 5709 and let us get a jump start on finding the policy that best fits your situation.
Independent insurance brokerage located in Tempe, AZ. We offer auto insurance, homeowners insurance, life insurance, renters insurance, commercial insurance…
Disclaimer: Coverage will vary on state, insurance company, and type of policy.
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