Tom's BlogIf you own a home, auto or business, then you have an insurance policy. An insurance policy is designed to protect assets such as your home, auto, or business in exchange for a premium for the coverage and protection provided for covered losses. However, just because you may have an insurance policy does not mean that each and every little loss you withstand must be reported or handled by the insurance company. Insurance is meant to protect you from financially devastating or catastrophic type of losses and not for losses such as a flat tire or a damaged door to your business. Unfortunately, large losses can and do happen which is why insurance policies have a deductible.
What is a Deductible?
We hear that word a lot but may not fully understand how it works regarding your insurance policy. It is a portion of the cost that you absorb if a large covered loss occurs. If a fire destroys your home, you probably don’t have enough money saved up to pay to rebuild/replace your home but you may have enough out of pocket money saved to pay for the small losses that occur. Your insurance policy is designed to pay for the larger, catastrophic claims so that they can offer lower premiums to YOU. If the insurance company paid for every single loss regardless of how big or small, imagine how large your insurance premium would be.
When Do Deductibles Apply?
In relation to most type of insurance policies (auto, home, and commercial), your deductible is applied each time you suffer a covered loss. For example, if your roof sustains significant damage due to high, heavy winds, your policy would provide a claim payout for the claim amount minus the applicable deductible on your N.C. homeowners insurance policy. If that same year, your home sustains extensive fire damage, then your N.C. homeowners policy would again pay for the claim amount to rebuild or replace your home less the applicable deductible.
*The higher deductible you choose will result in a lower insurance premium for you. Discuss this with your N.C. independent insurance agent.
What is the Best Deductible Amount?
The best deductible amount is what is best for you financially. Before you can decide, you must consider how much you can afford to pay out of your own pocket should you suffer a covered loss. The deductible is basically your share of risk absorption you are willing to cover. It is always best to consult with your local N.C. independent insurance agent to decide which deductible options best suit you and your budget.
