What effect does a home insurance deductible have on the premium?

 

The deductible amount has a direct impact on the home insurance premium amount which is paid monthly. If the deductible is high then the premium amount is reduced and a low deductible results in an increased premium amount. The deductible figure has a direct impact on the policy and the homeowner's financials. It is therefore important to understand the impact before making any changes.

The deductible refers to the money that the homeowner is required to pay before the payment towards damages is made by the insurance company. Eg: If the deductible amount is $2,000 then the homeowner has to pay the initial $2,000 damage and all damages above this would be paid by the insurance company. If the deductible amount is low then the homeowners are required to pay a higher premium usually on a monthly basis as already stated. While the premium amount may be high the homeowners stand to gain since they are not required to pay for much in the event of a loss or damage. With a high deductible the premium amount is lower, but the homeowner would be required to pay more in the event of a loss. It is therefore important for the homeowners to determine the deductible amount. The homeowners should be comfortable about deciding on the deductible amount and be ready to pay it regardless of what it is in case they decide to file a claim in the event of a loss.