How High Can I Set my Deductible?

Choosing your deductible for your home insurance or for insuring multiple properties is one of the things that most insurance companies are quite flexible with. What this means is that you are usually able to choose how high you want your deductible based on your premium and the value of your property. You can choose a lower deductible but can expect a higher premium or you can choose a higher deductible and get a discount of your annual premium. But how high is too high when it comes to your house insurance deductible?

This, essentially, depends on your financial situation. The main thing is that you can easily afford to pay the deductible. For some homeowners, you may only have around $500 of savings while others may have several thousands and thus a higher deductible will be no problem.

In general, most insurance policies will set the deductible at around 1 percent of the house value. You may be able to go to 2 percent but this is quite high. On a $200,000 home, this is a $4,000 deductible.

Experts suggest that a good deductible amount for house insurance is $1,000. A low deductible can be around $250 to $500. Generally speaking, a high deductible is usually considered anything above $1,000.

Choosing a Higher Deductible

If you do choose a higher deductible, such as $3,000, then you need to be able to ensure you can afford this if something does go wrong. The good thing about choosing a higher deductible is that you will only put in a claim for serious damage. It will end up being cheaper to pay for minor repairs out of your own pocket then putting in a claim and paying the deductible. This can include things like minor roof leaks and broken windows which can be claimed through your insurance company but you need to pay the deductible first.

You may be able to choose a deductible that is around $5,000 or even higher with some companies. However, this can be quite risky because when you are getting this high up, your insurance starts becoming obsolete as it will be too expensive to repair anything that is damaged. This is something that you need to think about.

In addition to checking into your financial situation you can also look into the risk factors of your home. Is it a brand new house made out of concrete or an older property made out of timber? Do you live near the coast, near a floodplain or in an area where natural disasters are common? If so, then there is a greater chance that something could happen to your property and thus it might be a good idea to lower the deductible just in case.

If you do choose to set your deductible quite high another thing you need to think about is the condition of certain structures in your home. The foundation, for example and the roof, are two of the structures that often need replacing after a storm or disaster. Check the condition of these structures to ensure they are in good shape before choosing a higher deductible.

You can set your deductible as high as you want, up to a certain limit which is usually around the $5,000 mark. While you will be able to save on your premium you could end up in hot water if you are faced with a disaster. However, this depends on your financial situation as well as the condition of your property. Make sure you talk it over with your spouse when looking into the various deductible limits.

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