How Do You Choose Deductibles?

[Milkman1265]

How do you choose the best deductible for you?

I find it crazy to have 2500 and claim anything less than 10k. Most repairs i've done at home has been over 4-5k and I will pay out of pocket.

Does it make sense to get a 10k deductible if im willing to pay out of pocket for most repairs?

Now if i have a 10k deductible, I wont claim if the damage is 11k. So isnt it essential the same as having maybe 15k deductible?

As experts, when will you actually file a claim and how big are your deductibles?

I think i will only claim if half my house got destroyed, but is the cost saving to out of pocket expense worth it?


I see insurance as catastrophic coverage only, but what is the best balance for other clients who may claim maybe 2k-3k? I've grew up in a household where we will always have back up and emergency savings to cover these things. Never really saw insurance as a need other than when we get sued for 1,000,000 or like a huge 100k loss.

What are your opinions?

 

[RFMaurone]

IMHO....

It comes down your savings and risk tolerance. I have clients who have 10k and others who have 1000.00 dollar deductibles. And then there is one client who is was in the NFL and now on television and he has a 50 K policy on his beach house.

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[indienoise]

Ive seen firsthand what excessive claims does to a person. Binding a ho8 for a friend of mine march 1 because of it.
But, people have coverage for things they cant afford. Or whatever makes the most financial sense. In 11 years of home ownership ive had one claim: roof replacement after hailstorm. The slight effect it had on my premium didnt come close to costing me what the roof would. I could've paid it, sure, but it would have wiped out my savings at the time.

For me, i get the lowest deductible i can but only claim losses i cant endure.

 

[agentinsouth]

How do you choose the best deductible for you? I find it crazy to have 2500 and claim anything less than 10k. Most repairs i've done at home has been over 4-5k and I will pay out of pocket. Does it make sense to get a 10k deductible if im willing to pay out of pocket for most repairs? Now if i have a 10k deductible, I wont claim if the damage is 11k. So isnt it essential the same as having maybe 15k deductible? As experts, when will you actually file a claim and how big are your deductibles? I think i will only claim if half my house got destroyed, but is the cost saving to out of pocket expense worth it? I see insurance as catastrophic coverage only, but what is the best balance for other clients who may claim maybe 2k-3k? I've grew up in a household where we will always have back up and emergency savings to cover these things. Never really saw insurance as a need other than when we get sued for 1,000,000 or like a huge 100k loss. What are your opinions?

I think about it from a loss ratio point of view.
Wind/ hail 1%-2%. OPD,I shoot for 1%.

 

[insurance1822]

I always quote $1,000 deductibles as a 15k deductible is absurd for 99% of people. If you have a 2.5k deductible & don't claim 4-5k losses...That makes zero sense. In my state even 1% is almost unheard of except State Farm.

Now granted most insured's are completed moron idiots so I'm sure I could push larger deductibles but it just doesn't make sense. Unless in your state's it's easier for carriers to non renew homes...it just...doesn't...make...sense.

50k deductible? Doesn't make sense in my state even if you're rich. The corresponding rate increases come nowhere close to out weighing the savings by taking that high of a deductible.

 

[agentinsouth]

I always quote $1,000 deductibles as a 15k deductible is absurd for 99% of people. If you have a 2.5k deductible & don't claim 4-5k losses...That makes zero sense. In my state even 1% is almost unheard of except State Farm. Now granted most insured's are completed moron idiots so I'm sure I could push larger deductibles but it just doesn't make sense. Unless in your state's it's easier for carriers to non renew homes...it just...doesn't...make...sense. 50k deductible? Doesn't make sense in my state even if you're rich. The corresponding rate increases come nowhere close to out weighing the savings by taking that high of a deductible.

I think you're right, it really depends on where you live in order to answer this question. For example,Chubb only writes 50k deductiblesin my area. I think if you're in a hurricane or high wind storm region you can up the deductibles to help keep your loss ratios down. Also, everyone else is doing it for the same reason so it's easier to sell.

 

[adj13921]

typically speaking the higher the deductible the lower the premium and the lower the deductible the higher the premium. Personally I think about it this way if I have a loss how much am I willing to write a check to the contractor for? If I can afford 5k then set your deductible for 5K if 1K then set it for 1k. You have to think about the fact that this loss may not happen for several years and where will you be financially then not now. Be safe go low on the deductible it hurts to write those checks. Side note there are contractors that can help with deductibles which can be questionable practice but its out there.

 

[SuperNewbie]

I agree that you set the deductible for what you can afford. The claim afterward is a different scenario. Yes, if you have a 2.5K deductible, a 5k claim is prob not a good idea, but if you don't have 5k, it's what you have to do. This is where an agent makes his money is in counseling like this. You help the customer decide on making that 5K claim and then help him adjust his policy in case another 5k claim happens. Over time, when that second claim doesn't happen, you talk to the client again about possibly readjusting. Write and forget is what agents with 70% retention do.

 

[adj13921]

As an adjuster I always explain it to folks like this: An insurance policy is a partnership in case of something happening to your home or personal property. You pay premiums to insure that partner is going to be there when you need him or want him to help in a loss. Your responsibility in the relationship specific to money is the monthly premium and the deductible outside of that you should not have to spend a dime. Now if you have the extra cash and feel generous in helping pay for what the insurance company owes from time to time to keep from having too many claims or something then feel free. Typically unless you have a bunch of theft claims and jewelry missing, tools stolen ect... stuff that you should have control over then you really don't have much to worry about as far as too many claims.

If you have no problem writing a check for 10K to a contractor if you have a hail loss or water loss then you will probably enjoy a lower premium until that loss happens. Personally I don't like writing what I consider a big check to a contractor so I go with the higher premium and lower deductible. I live in Texas and we have hail that hits the house every 3 to 5 years so low deductibles are where its at for me.

Insurance is not only for Catastrophic times its for everyday life accidents. Watch the commercials on TV they show you what most people use insurance for. Hail damages to roof and siding with broken windows, backed into your garage, broken water pipe while you were at work that damaged a lot of wood flooring. just life!! Shtuff Happens...lol

 

[adj13921]

i'm not sure why you advise if you have a $2500.00 Deductible and a $5000.00 claim its not a good idea? Its sounds like a great idea I pay half and the insurance company pays half! Done deal. Why would you pick up the tab for the insurance company when you have been paying the premiums for that $2500.00 they legally owe you? "News flash" the agent honestly doesn't want you to file the claim it hits his numbers that are reported back to the BIG DADDY Carrier and if he gets too many he can have problems. Just saying I know lots of agents and they get cranky when lots of claims start rolling in.

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I choose a low deductible personally. I don't mind paying a few bucks more a month in order to avoid writing a 10K check to some contractor I may or may not end up being happy with the next time a hail storm rolls thru.

Insurance is a partnership with the insured. Its a team effort the insured pay premiums to get the support when its needed or wanted. things happen in everyday life that you may needs some advise or financial support. Fender benders, backed into the garage, forgot the tub was running and it overflowed, dishwasher broke and water spilled out...tons of stuff. So the question is where is your comfort with a run a bad luck say 3 of these crazy things happen in a week or two and you have a 10K deductible then whoop 30K please.. ouch if it was me. My comfort is at 3k or 6K. So you just have to find that happy place if all hell breaks loose. You would be surprised how often people have multiple losses close together.

Talk to your agent see what the difference in premiums are from 2k to 10k deductible. probably not going to be a huge change in premium. If you have the cash to pay out of pocket for the smaller type claims then choose the higher deductible get the lower premium. Do the math see what makes sense for your comfort zone.