"This policy contains a clause which may limit the amount payable." Have you ever wondered what this means? You'll see it on the front page of most home insurance policies.
They are talking about the deductible on the policy. When you suffer a loss, there's almost always a deductible to be paid. The deductible amount may differ based on the type of loss you experience. Before the insurance company pays for a loss, the deductible must be paid by the policy holder. When the deductible is higher, the premiums paid are lower in comparison.
A policy may have different deductibles based on the peril of the loss. The most common types of deductible are:
Glass breakage deductible: Applies to claims relating to glass that forms part of your house. Typically, you can eliminate this deductible for a small additional premium.
Earthquake deductibles cover insurance claims that result when an earthquake causes damage. Typically, you get to choose from a few different earthquake deductible options. Deductible options are directly related to a percentage of an insurance policy's total property limit coverage.
Crime deductibles cover theft, vandalism, burglary, and mysterious disappearance claims. In most cases this deductible is something that is only for vacation and rental property. You can usually choose from two deductible options, which are $5,000 and $10,000.
Water deductibles are for water related damage claims, and these are generally for rentals and vacation homes. You can usually choose from two deductible options, which are $2,500 to $5,000.
Standard policy deductibles refer to different forms of loss and damage that are not specifically listed. In most cases they range from $500 to $5,000, depending on the policy holder's requirements.
Premiums are kept low by having deductibles, which will stop a home owner from making minimal damage claims. This significantly reduces an insurance company's costs, thereby helping to keep everyone's premium down.
If you have a low deductible you may be tempted to make claims on very small losses. When these minimal claims are made, the home owner will typically lose their "claims free discount". Base rates for the homeowner could rise after several smaller claims, and this could be actually more expensive than to repair or replace the damages on your own. Home owners who make claims too often sometimes find the insurance company refusing to renew their insurance.
The amount saved in premiums is quite high when a home owner decides to have a higher deductible on their policy. Small losses may not be covered, but you're really buying insurance to protect yourself from a catastrophic loss, such as earthquake, fire, windstorm damage, water damage, and break-ins. Having a higher deductible is wise because of the reasons stated here. Premiums will be lower when you repair or replace small damage or loss on your own, and overall, your costs will be lower. If a time comes when insurance will be needed, your policy will have you covered.
They are talking about the deductible on the policy. When you suffer a loss, there's almost always a deductible to be paid. The deductible amount may differ based on the type of loss you experience. Before the insurance company pays for a loss, the deductible must be paid by the policy holder. When the deductible is higher, the premiums paid are lower in comparison.
A policy may have different deductibles based on the peril of the loss. The most common types of deductible are:
Glass breakage deductible: Applies to claims relating to glass that forms part of your house. Typically, you can eliminate this deductible for a small additional premium.
Earthquake deductibles cover insurance claims that result when an earthquake causes damage. Typically, you get to choose from a few different earthquake deductible options. Deductible options are directly related to a percentage of an insurance policy's total property limit coverage.
Crime deductibles cover theft, vandalism, burglary, and mysterious disappearance claims. In most cases this deductible is something that is only for vacation and rental property. You can usually choose from two deductible options, which are $5,000 and $10,000.
Water deductibles are for water related damage claims, and these are generally for rentals and vacation homes. You can usually choose from two deductible options, which are $2,500 to $5,000.
Standard policy deductibles refer to different forms of loss and damage that are not specifically listed. In most cases they range from $500 to $5,000, depending on the policy holder's requirements.
Premiums are kept low by having deductibles, which will stop a home owner from making minimal damage claims. This significantly reduces an insurance company's costs, thereby helping to keep everyone's premium down.
If you have a low deductible you may be tempted to make claims on very small losses. When these minimal claims are made, the home owner will typically lose their "claims free discount". Base rates for the homeowner could rise after several smaller claims, and this could be actually more expensive than to repair or replace the damages on your own. Home owners who make claims too often sometimes find the insurance company refusing to renew their insurance.
The amount saved in premiums is quite high when a home owner decides to have a higher deductible on their policy. Small losses may not be covered, but you're really buying insurance to protect yourself from a catastrophic loss, such as earthquake, fire, windstorm damage, water damage, and break-ins. Having a higher deductible is wise because of the reasons stated here. Premiums will be lower when you repair or replace small damage or loss on your own, and overall, your costs will be lower. If a time comes when insurance will be needed, your policy will have you covered.
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