High deductible insurance policies are often a popular option for homes of higher insured value, as homeowners tend to have the means to pay the deductible if necessary. (Photo courtesy of Angie's List member Todd C. of Maple Valley, Wash.)
If you have a mortgage, your lender requires you to have homeowners insurance to provide coverage for disasters such as damage due to fire, lightning, hail, explosions and theft. And as a responsible homeowner, you most likely want to make certain you have enough insurance to cover the cost of rebuilding your home at current construction prices.
“When writing a new policy presently, the most common deductible is $1,000,”
says Winfred Seymour, account executive for highly rated Humble & Davenport Insurance in Renton, Washington. “If I am reviewing a customer’s policy from another carrier and I see a $250 or a $500 deductible, that tells me that the policy has probably not had a review in a very long time.” Seymour says increasing the deductible can save a homeowner between 10 and 30 percent on his or her annual premiums, depending on the insurance provider. “You can make up the difference in two to four years with a higher deductible,” he says, noting that the money saved on an annual premium can be used toward the higher deductible when it’s needed.