Understanding your insurance deductibles

Understanding your insurance deductibles
A key element to understanding your insurance policy and your insurance coverage is understanding your deductible. This understanding helps you not only be knowledgeable about your coverage but also get the bets coverage for the bets rate as your deductible is key to your insurance rates.

Practically defined, the deductible is an amount of money that you yourself are responsible for paying toward an insured loss. It is your out of pocket contribution to the loss.  This is your share and contribution to the loss. So the larger you are willing to contribute, the less you will pay for your insurance policy.

Deductibles are mostly a specific dollar amount but sometime, it is a percentage of the coverage amount. The deductible is always listed on your policy declaration page and clearly stated.

So how these deductible work? For dollar amount deductibles, a specific amount would be deducted from the total claim payment. Percentage deductibles generally only apply to homeowners policies and earthquake policies and are calculated based on a percentage of the home’s insured value. A deductible applies each time you file a claim. The one major exception to this is in Florida, where hurricane deductibles specifically are applied per season rather than for each storm. Deductibles generally apply to property damage, not to the liability coverage of homeowners or auto insurance policies.

Raising your deductible is one way to save on your insurance premium. However, since the deductible is your out of pocket amount, make sure that in the vent of a loss, you are comfortable with the amount and could afford the payment.