Your Insurance Deductibles
- How much risk are
you willing to take?
- How much risk should
- How much are you
willing to pay for different levels of risk?
protection against unforeseen losses. Most people buy insurance to protect
against large or catastrophic losses.
For auto and homeowners/renters
insurance, a major factor to consider is the level of deductible. "Deductibles"
are the amounts you pay before the insurance company starts paying. Choosing
a large deductible will bring down your premiums and eliminate the hassle
of filing claims for small losses.
Periodically you should
review your insurance coverage to make sure you are adequately covered
and that you are not paying for insurance you do not need. With your homeowners
or renters policy, increasing the deductible from $250 to $500 or $1000
may reduce your premiums by up to 20%. The savings from increasing the
deductibles for collision and comprehensive coverage on your auto policy
may save you even more. Here is a chart that can help you review your
choices. Call your insurance agent and get quotes for coverage with different
levels of deductibles.
with deductible of $500
with deductible of $1000
- Collision coverage
- Comprehensive coverage
Choose a deductible
level that you can comfortably accept if you have a loss. But as the chart
can show, the reduction in premiums from larger deductibles may be meaningful.
topic you may want to consider is a personal umbrella liability policy.
Most homeowner and auto policies provide some level of liability coverage.
Additional liability coverage, which would kick in after your other coverage,
may be available very cheaply. For less than $125 per year, many individuals
are able to buy a $1 million personal umbrella insurance policy. Ask your
agent about this type of policy.
Make sure you are
properly insured. But do not pay for insurance you do not need.