Go big with your homeowner deductible

April 17, 2013

If the insurance company is going to force a higher wind/hail deductible, you may as well carry the higher deductible for less likely losses, too.

  POSTAGE  by Rob Stamp

In response to all the severe weather claims from the past two years, more and more insurance companies are requiring higher deductibles than ever for property policies. That’s been particularly true in the past few years when companies mandated higher deductibles for losses caused by wind or hail. Some raised the minimum deductible for wind/hail claims to $1,000, while others went to a percentage deductible that could cost you a whole lot more. Now, we’re seeing a trend of higher deductibles, period, not just those for wind or hail damage.

Any time an insurer makes drastic changes to any terms or conditions of a policy, the homeowner is notified of the changes at renewal. Since we all know how little that stuff actually gets read, it’s a good idea to at least glance over it to familiarize yourself with what’s changing. If it makes no sense, call your agent. That’s why he or she is there. Insurance gobbledygook often needs a translator. (Some things never change.)

If you are required to carry a $1,000 deductible for wind or hail — the most likely reason a homeowner would file a claim — you might consider raising the deductible on the other covered perils and take the premium credit for it. If you had a fire, got broken into or had some electronics fried out by a lightning strike, chances are you wouldn’t want to file a claim for less than $1,000 anyway. Homeowner policies today are priced similar to the way insurers traditionally priced auto insurance. Those with accidents and tickets pay more than those with clean driving records. Now, homeowners premiums almost always go up when there’s been a claim. There are some exceptions for weather-related losses, but not always.

Unfortunately, homeowners premiums are going up whether you’ve filed a claim or not. The beating the industry has taken of late from Mother Nature gets passed along to all policyholders. The best way to protect your rate is to carry the highest deductible you can afford and maintain a clean claim record by taking care of the small stuff yourself.