Home Insurance

Home Coverage Reduced With High Deductible Insurance.

Depending on the type of homeowners insurance a person carries, a high deductible may be acceptable in the event of a major disaster. However, with smaller claims, many simply pay for the loss themselves. Carrying a deductible of $1,000 or more may not seem like a big deal if the home is wiped out by a storm or major fire, and is declared a major or total loss. Lesser claims may, however, may present a major financial burden to the homeowner for losses slightly above the deductible amount.

For example, a storm damages a portion of your garage roof and repairs are estimated to be about $1,250. Your insurance carrier will only be responsible for $250 and unless you have a grand to pay the deductible, the repairs may not get done for awhile. Additionally, depending on your insurance carrier and your claims history, filing the claim may increase your monthly premiums.

Additionally, many home insurance policies protect the homeowner against claims by others who may be hurt on the property and a high deductible can spark a civil suit against you if you cannot pay it at the time of the loss. Again, depending on your carrier they pay the expenses and recoup the loss from you, or they may pay all bills with the exception of the deductible amount and the injured party can seek restitution from you.

While high deductible insurance policies can save money on the monthly premiums, and over the length of ownership the savings can be incredible. However, one incident may tax your savings and make the lower monthly payments seem insignificant in the face of a major loss.