Balancing Risk And Deductibles

Balancing Risk And Deductibles

The bImage titleenefit of insurance is to transfer the risk of loss to a company in exchange for a premium. The deductible is an amount the insured pays out of pocket before the insurance starts covering the cost of the loss. The challenge is to balance the risk an insured can accept with the premium being charged.

To manage insurance premiums, policy holders often consider adjusting their deductibles. Lower deductibles result in less money out of pocket if a loss occurs in return for higher premiums. Higher deductibles will lower premiums but require that the insured bear a larger amount of the first part of the loss.

Insurance companies offer deductibles as a specific dollar amount or as a percentage of the total amount of insurance policy. The amount is usually shown on the declaration page of homeowner and auto policies.

A small fire in a $300,000 home that resulted in $5,000 of damage might not be covered because it is less than the 2% deductible which would be $6,000. If the homeowner can afford the cost of repairs in exchange for lower premiums, it might be worth it. On the other hand, if that loss would be difficult for the homeowner, a change in the deductible for higher premiums could be considered.

Raising deductibles can save money in the present when paying the premium but could cause problems later if a claim occurs. Homeowners should review deductibles with their property insurance agent to be familiar with the amounts and make any changes that would be appropriate.



Mary Ann Lightfoot Headshot
Author:
Phone: 702-875-1114
Dated: January 16th 2018
Views: 90
About Mary Ann: Originally from Chicago, IL. I started in Real Estate in 2000 selling new homes for an Age Restrict...

Property Search








RSS Feed

View our latest blog posts in your RSS reader. Click here to access. RSS

Search Blog

Recent Blogs

Viva LAS VEGAS Rockabilly Weekend 2018 - The Viva Las Vegas Rockabilly
Las Vegas Default Rate Rises - Las Vegas Lenders issued more
Nevada DMV Is First In America To Work With Feds To Battle Human Trafficking - "No Child For Sale."  
What Does Success Mean To You 4 16 18 - How do you define Success?  I

Saved Properties

This is a list of your favorite properties. We will email you if a property is reduced or leaves the market.

Click 'Save' to add a property to this list.

Register / Login

New & returning visitors please enter your information to login.

By clicking 'register' you are agreeing to our terms of use & giving us expressed written consent to contact you.

Questions? Comments? Complaints?

This message will go directly to the head of our team.

Location & Address

eXp Realty Las Vegas
6671 Las Vegas Boulevard South Suite D-210
Las Vegas, NV
702-830-7634