If you call today and ask for a homeowners insurance quote more than likely you are going to be offered a low deductible.
When we help local home owners with their homeowners insurance we see deductibles as low as $500 on a homeowners policy.
What customers were never explained is that their premium dollars are better spent somewhere else..
A typical non weather home insurance claim may never happen for most of our customers.
The average non weather home claim is made every 20 years for many of us.
The odds are you are not going to make a non weather event claim and the insurance company is going to keep more of your money.
Consider the premium savings over a 5 year claim free period
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The 5 year premium savings from taking a $5,000 all other perils deductible instead of a $500 all other perils deductible is
You should consider a transfer of risk from the insurance company to you.
When you get a low deductible you are telling the insurance company you are probably going to be making a claim and they should charge you more for your policy.
If you are someone that doesn’t make claims,
you need to consider a higher all other perils deductible.
All other perils deductible is any claim that is not a hurricane or named storm.
What about my hurricane deductible?
If you live in South Louisiana or in the New Orleans area, I would suggest getting the Hurricane or Named Storm deductible as low as possible since we are at risk for a hurricane every year.
1%-5% deductibles in our area are the most common.
I think a 1% deductible for all claims is the best option I am seeing in the market right now.
1% of your insured home value would be your deductible
example) 400,000 house x 1% = $4000 deductible for all claims
Not all home insurance companies offer this option but some do and I would recommend asking for one deductible for all claims option.
When you save money on increasing your all other perils deductible,
you should consider making sure your liability limits are where they need to be.
What your insurance policy limits should look like
- Higher All Other Perils deductible 2500-5000
- Liability limit starting at 300,000
- Auto liability limit 250,000/500,000
- Uninsured Motorists limit 250,000/500,000
- Umbrella limit 1,000,000 minimum
What’s this all about?
Transfer of risk is not just a homeowners insurance strategy for wealthy individuals.
This is something you can do as well.
You can save a considerable amount of money over time by taking on a higher deductible and moving some of those savings to increase your liability and make sure you have the insurance protection in place to protect you, your family, your investments, your assets and most importantly your future earnings.
And remember only take on the amount of risk you can handle.
Insurance is used to protect you from a financially devastating event.
Raise your deductible to a level that would not hurt you financially.
If a $1000 loss is a financially devastating event,
don’t raise your deductible higher to save money on your premium.
Insurance is to help you sleep at night knowing you are protected,
not to keep you up at night.