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How do home insurance deductibles work?

You will constantly hear that to cut down on the cost of your insurance premiums, you need to raise your deductibles. However, most people will not understand what that actually means and will need to have their home insurance deductibles explained.

What Are Insurance Deductibles?

When you raise your deductibles, you will raise the amount that you payout before your insurance company does. Usually, the deductible is a set amount and there are some homeowners who will only pay 50 or 100 dollars upfront. However, the lower the insurance deductible, the more your insurance is going to cost since the company will need to pay out more.

Save Money by Raising Deductibles

You can save up to 25 percent if you agree to pay between 500 and 1000 dollars in the event of a claim. There are other companies who will offer it in a percentage of the value of them home; a home that costs 100,000 dollars will pay 1000 dollars with a 1 percent deductible.

The problem is that this is a lot of money to pay out of your own pocket and is not something that all families can afford. You will need to make sure there are some savings somewhere in case you do need to make a claim on your insurance. On top of that, there are chances that your insurance claim will be denied, so you will have to pay all the cost.

There may be some companies that have different deductibles for different parts of the insurance. If you take out earthquake insurance, there are chances that there are some compulsory deductibles added to your policy; being in an earthquake zone, there are more chances that you are going to need to make a claim on the policy so the company is pre-empting this.

Not the Only Way to Save Money

Now that you have had your home insurance deductibles explained, it is worth knowing that this is not the only way to save money on the cost of your insurance. There are a few options available to you, especially if you have other forms of insurance, like health and auto insurance.

The best thing to do is have all your insurances with one provider. They will offer discounts on the premiums by “buying in bulk”. You will be seen as a loyal customer and this is something that insurance companies are willing to reward.

Make sure that you only take out the type of insurance that you need. Don’t take out earthquake insurance if you live in an area that rarely gets earthquakes. You can also make changes to your home to help lower the premiums; you can contact your insurer to find out how you can do this but it will usually involve adding an alarm system or reducing the chance that there will be a fire in your home by updating your wiring.

The best thing that you can do is shop around for your home insurance. While you have had your home insurance deductibles explained, it is worth noting that each company is different. Some companies will be willing to insure you for a lower cost and lower deductible than other companies; the only way you will find this is by price comparison.