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Home insuranceA deductible is the amount of any claim the policyholder must pay before the insurance pays the rest. Deductibles are common on most home insurance policies. They provide for a way of reducing costs and keep premiums lower. However, there are several types of deductibles available. What are these? How do they best benefit you?

Homeowners can choose which fits their needs. Two of the most common include the flat deductible and the percentage deductible. Here is what you need to know about them.

What Is a Flat Deductible?

This is the most common form. Nearly all home insurance policies use this method. It is simple and straightforward. You pay a specific dollar amount before the insurance company pays the rest in a covered claim. This may be $1,000. It could be $2,500. The amount depends on what you agree on with your home insurance company.

Here is an example. Your home suffers a significant fire. The cause was electric lines. Your policy covers the claim. The total damage loss is $10,000. Your deductible is $2,000. You pay $2,000 towards the loss. The home insurance company pays the remaining $8,000.

What is a Percentage Deductible?

Some home insurance policies peg the deductible as a percentage. It represents a percentage of the dwelling coverage you have on your home. On your policy, this is Coverage A, in most cases. It sets a specific percentage based on this value.

For example, if the policy has a 1% deductible, this means you pay 1% of the value of dwelling coverage you have. If your home is worth $200,000, you agree to pay $2,000 as a deductible. If your home’s dwelling coverage is $350,000, you agree to pay $3,500 in a deductible.

Which One Is Right for You?

This depends on your goals and your needs. You may be able to negotiate your deductible with your insurance company. A lower deductible will reduce how much you must pay when a claim occurs. However, it will also boost your premiums in most cases. This means insurance will cost you more. If you have can maintain a higher deductible for use if you need it, then increasing it lowers your premium.

It is important to compare both options. Your Tampa home insurance agent can help. He or she can often offer examples. Consider the value of your home carefully here. It could be the deciding factor in which method is best for you.
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