Insurance Deductible

You hear the term Insurance Deductible every time that you go to purchase insurance. It doesn’t matter if it’s car insurance, home insurance, boat insurance, or health insurance. Most people don’t fully understand what this term means.

How does an Insurance Deductible work?

The deductible is the amount of insurance that you elect to pay if you have a claim. If there is $5000 damage done to your car from an accident, if your car insurance deductible is $500, than you pay $500 and the insurance company will then pay for the remaining $4500 in cost. The higher your deductible is the lower your insurance premium is. The lower your deductible is, the higher your insurance premiums are. This is because you are taking on a higher financial risk.

Can My Home Insurance Deductible Change?

Yes, your home insurance deductible can change. Some insurance companies have been adjusting the minimum deductibles for home insurance. They are doing this because of the large losses that they are paying out across the state of Minnesota for wind and hail damage. Raising minimum deductibles and wind/hail deductibles is a way for them to limit this risk and ultimately pay less. Many home insurance companies are changing the wind/hail deductibles. Some are going to $2500 or a 1% of your Coverage A or Dwelling Coverage. Review your declaration page when you receive it to review your deductible. For a more details about the insurance deductible check out our YouTube Video.

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