For most people, paying the insurance bill isn’t the greatest time of the year. You probably have home insurance, car insurance, health insurance, and more. The costs tend to add up quickly for most of us.

 

While costs keep rising, we strive to find ways to save cash. Some consider cutting coverage. Others look for ways to lower expenses without getting rid of a policy of three. One good way to do just that? Increasing the deductible on your home insurance policy.

 

Home Insurance Deductibles

 

Your home insurance deductible isn’t a cost like your premium is. You don’t pay your deductible to the insurance company. The deductible is something you agree to cover before the insurance company begins to pay out.

 

For example, if your deductible is $5,000, then you’d pay $5,000 out of pocket for any damages to your home. Once you have covered the deductible, then your home insurance policy would kick in, and the insurance company would begin to pay out.

 

The most common type of deductible is a dollar-amount deductible of $1,000. The example above is of such. Another type of deductible is a percentage-based deductible. This allows you to pay a small percentage of any damages incurred while the insurance company would pay the rest.

 

How to Find the Ideal Deductible for You

 

Now that we’ve discussed what a deductible is, let’s look into finding the ideal deductible for your situation. While there is no such thing as a “good” deductible, as we all have different needs, there are a few general guidelines to consider.

 

First, the deductible is how much you can afford to spend out of pocket. It’s a personal thing. If you don’t have a lot money in the bank or coming in each month, then you’ll want a higher deductible. Having a high deductible makes the monthly payment smaller. Having a smaller deductible makes the monthly payment larger.

 

If you can’t cover a $5,000 or $10,000 deductible payment, then you won’t be able to repair your home properly in a situation when home insurance kicks in. As such, you’d want to pay for a lower deductible on your policy. The problem with lower deductibles is they always equate to higher home insurance premiums.

 

What is a Good Deductible for Home Insurance?

 

It’s not easy finding the ideal home insurance deductible for you and your family. There’s a lot of factors to consider. From premiums to out-of-pocket costs, you need to think through what you’re willing to pay.

 

Here are a few factors to consider:

 

• Premium Costs: You’ll always pay more in premiums when your deductible is lower. That’s just how the home insurance world works. You can expect to pay up to 20% less in premiums when raising your deductible. Is the savings worth it? Well, for some it is. Others find the high deductible an issue.

 

• Deductible Costs: Sure, changing your deductible to $10,000 will significantly lower your insurance premium. If you don’t have more than $10,000 sitting in the bank waiting to be spent on home repairs at any one time, it won’t be worth it. Your deductible should be low enough that you wouldn’t have to take a loan or hit credit cards to pay off the damages before your home insurance kicks in.

 

• Your Risks: Finally, you must consider your risks when deciding how low or high to keep your deductible. If you have children or pets, then a lower deductible may be better. If you often entertain guests, then a lower premium may be a good idea. If your home is older, then a lower deductible may be a good idea. Take your situation into account before finding the ideal deductible.

 

Home Insurance Deductibles & You

 

You can save money on your home insurance premiums by raising your deductible. For some, the savings is worth it. For those who may not be able to cover the high deductible in case of a claim, a lower deductible may be preferable. Ideally, you’ll speak to an insurance agent before settling on your deductible.