When it comes to protecting our properties, insurance plays a fundamental role. But what about deductibles? In this article, we will explain what a property insurance deductible is, how it works, and why it is important to understand it before deciding which insurance to buy.
What is a deductible?
This is the amount you assume as part of your financial responsibility in case of an event covered by the policy. Deductibles are established in the insurance contract and may vary depending on the company and the type of coverage you have.
How does it work?
Imagine you have property insurance, and a hurricane causes damage to the roof of your house. The total cost to repair the damage is $10,000. If your policy has a deductible, it means that the insurer will take out the amount of the deductible established in the policy and compensate the difference.
It is important to remember that deductibles are usually applied per event, not per year. This means that if you face multiple events in a year that require claims (for example, hurricane damage and theft), you will have to pay the deductible for each of those events.
Types of deductibles
Fixed deductible. In this case, the deductible is a specific dollar amount that is set when you purchase the policy. For example, a fixed deductible of $500 means you must pay the first $500 of each claim.
Percentage deductible. In this case, the deductible is calculated as a percentage of the insured value of the property. If you have a property insured for $200,000 and the deductible is 2%, you will have to pay $4,000; the insurance company will pay the rest.
Benefits of including a deductible in your property insurance
Lower insurance costs. Although it may be discouraging to have to pay an amount in case of an event, this contribution helps keep premiums at a more affordable level.
Premium increase protection: When you file claims frequently, your homeowner’s insurance premiums may increase. Opting for a higher deductible and being selective in the claims you file can help you maintain stable premiums and prevent unwanted increases.
Increased focus on loss prevention. If you know you will be responsible for some of the costs of an event, you are more likely to do your best to prevent loss and damage. For example, you can invest in regular maintenance of your property, install additional security measures, or take extra precautions to avoid risks. Overall, this can save you money and reduce the likelihood of facing adverse situations.
How to choose the most suitable deductible for you
Choosing the right deductible is a balance between the financial risk you are willing to take in case of an event and the premiums you are willing to pay. Here are some tips to help you make that decision:
- Assess your financial capability. Consider how much you can comfortably pay out of pocket in case of an event covered by the policy. If you have enough savings to cover a higher deductible, you could opt for a higher fixed deductible to reduce the price of the insurance.
- Compare premiums and deductibles. Request quotes from different insurance companies and compare how monthly premiums change based on your deductible. This will give you a clear idea of how much you could save or spend depending on the deductible you choose.
- Analyze your claims history. If you have a history of filing few or no claims, you may feel more comfortable opting for a higher deductible. However, if you tend to file claims frequently, a lower deductible might be more convenient.
In short, deductibles are a very important part of insurance. Understanding what they are and how they work is essential for evaluating different options when purchasing a policy. Remember to consider your financial capabilities, compare premiums and deductibles, and analyze your claims history to find the right balance between financial risk and protecting your property. If you want to know more about deductibles and other aspects of insurance, at Triple-S Propiedad we are happy to advise you. Call us at 787 749-4600 or visit propiedad.grupotriples.com/en/.