The Villages From The Air

The Villages is a popular retirement destination. Home prices average around $275,000, and countless seniors find the community affordable. Even so, when you retire, you may decide to cut back on certain household expenses. You might want to review your homeowner's insurance premiums. Or you could consider raising your policy's deductibles. Is this a wise step to take?

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Understanding A Deductible

A deductible is your responsibility for an insurance claim before your policy starts to pay. You'll pay the deductible, and your policy will cover the rest of the claim cost up to your policy limits.

Your home's structure and contents insurance, and sometimes other provisions, will likely contain deductibles. Deductibles vary from policy to policy, and you often can select values appropriate to you. In The Villages, you might find structure coverage deductibles ranging from $500 all the way to $5,000 and sometimes higher.

Deductibles At Work

Let's say your insurance deductible is $500, and your home sustains $1,500 worth of damage from a severe storm. Your policy will pay for repairs after you pay your deductible towards these costs. You'll pay the $500 and your policy will pay the remaining $1,000.

The formula is: Total Claim - Deductible = Insurance Company Payout. In your case, that is $1,500 - $500 = Company Payout of $1,000.

Does Raising Your Deductible Help Premiums?

By raising your deductible, your insurer will shoulder less of the cost of a claim if one arises. Thus, they will reduce your premium costs because of this lowered risk. In The Villages, raising your deductible will reduce your premium and it would save you each year on your Home Insurance. That's good savings for most people.

Nevertheless, is this the right step to take?

Why Should I Not Increase the Deductible?

Think twice before increasing your home insurance deductible. It might lead to a smaller premium in the short-term. Yet, the long-term effects might prove financially challenging.

By raising your deductible, you'll shoulder more of the cost of a claim. Can you afford to pay the full cost of all the damages? If the total loss of the claim falls below your deductible, your insurance won't pay anything.

A higher deductible will decrease your premium, but you will pay more out of pocket if you have a claim. Basically, if you have no claims, you come out ahead with a lower premium. But if you have a claim, the higher out of pocket expense to you could be a burden. That's a decision only you can make.

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