Is high or low deductible insurance a better value?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jan 30, 2018

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Insurance Question from Greenville, SC

Asked on 01/30/2018

Is high or low deductible insurance a better value? Assuming I have plenty of money to self-insure for amounts below my deductible, is high or lower deductible insurance a better value?Do insurance companies generally make more money on high vs. low deductible homeowners policies? Or do they price it fairly to cover claims plus expenses evenly for both? Or, similarly, do they pay out the same percentage of policy income on low vs. high-deductible policies? Obviously this question is across large pools of insureds, not on an individual basis.

Answer given on February 06, 2018

The size of your deductible can affect the cost of your homeowner insurance.  Higher deductibles are preferred by many insurance companies as it avoids small, or nuisance, claims.  It also helps you, the policyholder, to save money.

The best way to determine what deductible you should have is to first determine what you can afford to pay if there is a loss.  A higher deductible may make you fully responsible for a window claim or a small water leak.  Also, ask your agent or insurance company for quotes for various deductibles. Sometimes a lower deductible can cost more than the difference between it and the next deductible.  Also, see if your insurance company has a maximum loss limit before they would waive the deductible.  Some insurance companies will waive the deductible if the loss exceeds $50,000 or $100,000.  All of this information can help you determine the best deductible to purchase.


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