How to Choose a Home Insurance Deductible

Your home insurance deductible affects the amount you pay on your homeowners insurance each month. The lower the deductible, the higher the cost. It can be tricky to determine the right amount for you. You should be able to afford to pay your deductible, but you do not want it to be too low, as this greatly increases insurance costs.

Difficulty:

Easy

Instructions

1. Determine what type of deductible your insurance company offers. Some companies offer a set deductible amount. Other companies gauge the deductible as a percentage of what your home is worth.

2. Plan for the worst. Consider how much you can afford to pay out of pocket if a disaster were to happen.

3. Compare the costs of the different deductible amounts. Ask your insurance agent to quote the amount you can afford to pay out of pocket and compare it to the deductibles on either side of it. You may find that the savings you receive will allow you to save the difference and cover the higher deductible.

4. Choose the deductible that is the most cost effective for you. For example the higher deductible might reduce your rates by more than the deductible costs each year.

5. Check your insurance policy each year at renewal time to make sure your deductible amount has not changed with the new policy.

Tips & Warnings

• Inventory your household items to make sure that you have enough insurance to cover replacing your possessions. Keep this list in a safety deposit box or another place besides your home. This will help with finding a policy.

• To save money on your insurance costs take advantage of employee discounts, and alumni discounts that may be available to you.