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Large Brick HomeIf you own a home, you should be aware of what your deductible is. This is the self-insured part of your home insurance policy; in other words, this is what you are willing to pay out of pocket, before the insurance company steps in to pay for damages.

More often than not, our new clients know what their health insurance deductible is. But few know their auto insurance deductible, and rarely do they know their home insurance deductible. Why? Usability has a lot to do with it. Health insurance is used far more often, and has a greater expense based on which deductible is chosen. Auto insurance is not used as often, but used enough that it's easier to remember, and typically an auto finance company will not allow more than a $1,000 collision deductible.

What's most surprising is how many people don't realize they have a "split" or "percentage" based home insurance deductible. For example, it's not uncommon to see some companies mandate a general deductible of $1,000, and then a 1% deductible for wind or hail damage. This means a home insured for $450,000 would result in $4,500 in out of pocket expense if the damage was a result of wind or hail.

Recently, someone contacted our office to compare coverage and pricing. This individual had a policy with one of our competitors, who happens to be the 2nd largest home insurer in the state. The home was being insured for $1,000,000 and had a 3% deductible. This means the out of pocket expense to the home owner would be $30,000 for any claim. The problem in this case was the owner of the home had no idea they were on the hook for $30,000  — and they're alone in being unaware of their percentage based deductible. I'm a big fan of our clients self-insuring for more if they have a high deductible tolerance and it makes sense to carry the higher deductible. Truth is, sometimes the savings is not worth the risk of self-insuring for more. The key is to review what the deductible is, what the options are, and what works best for the home owner.

Our firm is fortunate and proud to say none of our companies are mandating we put a "split" deductible on the homes we're insuring. This means we can offer one deductible for all claims, and remove the confusion of splits and percentage based deductibles. This is another reason we're able to provide objective advice, better product offerings, and a better experience.

Bottom Line: Know what your deductible is. If possible, look at several options to see if it makes sense to carry a higher deductible. Work with an agency that can search a variety of companies and avoid a "split" or "percentage" based deductible if possible.

If you have questions about coverage, we have answers. Call Raymond, Preston & Reed, LLC at (615) 866-2728 for a free Brentwood TN home insurance quote.

(This article originally appeared on LinkedIn Pulse.)
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Brentwood, TN 37027
Phone: 615.866.2728
Email: info@rprinsurance.com
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